One of the most frequent questions clients ask is: “What can I keep through my bankruptcy?” Most Chapter 7 bankruptcies are considered “no asset” cases, meaning there is no “non-exempt” properties for the Trustee to claim. California has a generous exemption scheme and most clients do not have to give up anything in exchange for the discharge of debt.
Let’s take a hypothetical debtor: Jane
She has the following assets:
- Clothing: $1,000
- Furniture total: $5,000
- Electronics: $500
- Jewelry: $4,000
- Car: $8,000
- Checking account: $2,000
- Cash: $300
Since she has no real estate with equity, she would use CCP703. Looking at the exemption chart, first, we would apply items that has its own exemptions. In this case, let’s apply the exemption which applies to: Household furnishings & personal effects. This would include clothing, furniture, and electronics (assuming items were used primarily for the debtor’s personal use.) As long as each item is worth less then $525 per item all of the clothing, furniture and electronics would be exempt (protected).
Next, the jewelry. Jane would first apply the $1,350 exemption that applies only to jewelry. To cover the shortage of the remaining $2,650 ($4000 - $1350), Jane would peel off $2,650 from her “Wild Card.” Now Jane has $19,175 remaining in her Wild Card ($21,825 - $2,650).
For the car, we would repeat the exact same steps used for jewelry. First applying the $3,300 vehicle exemption, then using the Wild Card for the remaining amount. Now Jane has $14,475 remaining in her Wild Card ($19,175 - $4,700)
To protect the money in Jane’s checking account and cash on hand, she would apply her remaining Wild Card amount.
In determining the fair market value for the items you own, it’s important to remember that it’s replacement value in its current condition. Not the “new” value.
This example is merely meant as an informational tool. You should consult with a San Francisco bankruptcy attorney to discuss the specifics of your case.
