Filing for bankruptcy in California doesn’t mean losing everything. State law provides exemptions that allow debtors to protect essential assets, ensuring a fresh start rather than financial devastation. In fact, Ms. Doling worked with several colleagues and California Senator Bob Wieckowski to draft and pass new exemptions, including California’s new homestead exemption (AB 1885 in 2020) and the new personal property exemptions (SB 1099 in 2022). She testified before the California State Senate and State Assembly. So, if you want an expert in asset protection and exemption planning, you’ve found the right person.
Two Exemption Systems
California offers two exemption systems—System 1 (704) and System 2 (703)—each benefiting different financial situations. Debtors must choose one; they cannot mix exemptions from both.
System 1 (704): Ideal for homeowners with substantial equity, this system provides a homestead exemption ranging from a 2025 minimum of $361,110 and a maximum of $722,220, depending on your county median home values. The 704s also protect pensions, public benefits, and certain personal property.
System 2 (703): More beneficial for those with limited home equity or no home. This system includes a “wildcard exemption” of up to $33,650, which can apply to any property, including cash and bank accounts.
How These Exemptions Protect Debtors
- Keep Your Home: The homestead exemption prevents forced home sales if equity is within protected limits.
- Retain Essential Property: Vehicles, household goods, tools of trade, and retirement accounts often remain untouched.
- Preserve Livelihood: Business tools, wages, and certain benefits (Social Security, disability, etc.) are shielded, helping debtors rebuild financially.
Understanding which exemption system best suits your needs is crucial. Furthermore, there are exemptions and limitation to the exemptions. Do not try to apply exemptions in bankruptcy without the legal advice of an experienced bankruptcy attorney. Unfortunately, many debtors and inexperienced attorneys try to use the exemptions and make fatal mistakes that cannot be corrected. Those mistakes can result in the loss of your home, vehicles, retirement, etc. So, don’t gamble with those important assets. Get the advice you need to protect yourself and your assets. We offer a free consultation if you complete our client intake. Just call (844)894-4440.
Author: Jenny L. Doling, Esq., LLM Taxation
CA State Bar Certified Bankruptcy Specialist
NACBA – Vice President
San Diego Bankruptcy Forum – Immediate Past President
Serving Bankruptcy Clients throughout California and
Tax Clients Nationally