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California's Exemptions & How They Work

by on 1/29/2013

California is one of the states that has opted out of the federal exemptions (11 USC 522) and have created their own exemption scheme. CCCP 703.130 states specifically that if California is your domiciled state, according to 11 USC 522, then you do not have the option to use the federal exemptions. Simply put, you must choose one of the California state exemptions schemes.

The California exemptions schemes are located in the California Code of Civil Procedure. One is in section 703 and the other is in section 704. Often you will hear them referenced by the section they are in “703 exemptions” and “704 exemptions.”   For simplicity sake, consider them like menus, the adult’s menu and the children’s menu. Each section protects property differently, so it is important to determine which section will help you the most.

Another important note is the 703 exemptions scheme is known as the community property scheme. This means that if you are married and your spouse is not filing with you, and you choose to use the 703 exemptions, you are making that choice for the community (you and your spouse) and because of that California law requires that your spouse signoff on (a spousal waiver) the way you choose to use the exemptions (the property you choose to protect) [CCCP 703.140(a)(2)]. This means if your spouse files, while your case is still pending, your spouse has to use the exemptions the exact same way you used them. In other words you can’t double dip and use the exemptions twice by simply filing separate cases.  Use of the 704 exemptions scheme does not require such a waiver, however there are some limitations on the ability to use the 704 exemptions in each spouses case if filed separately. This is where the experience of an attorney can help determine the best way to protect your assets.

Filing for bankruptcy

The amount of the exemptions will periodically change.  CCCP 703.120 requires the California Law Revision Commission to review and recommend changes at least every 10 years. According to CCCP 703.150, every three year interval ending on April 1 the amounts will adjust. April 2013 is the end of a three year interval. The California Judicial council is required to publish the current numbers as well as the date of the next change. At the time of the publishing of this article the Judicial Publication can be found here.