What Laws Protect My Property From Being Taken By Creditors or The Bankruptcy Trustee?

California is one of several states, that "opted out" of the Federal Bankruptcy Exemptions under 11 U.S.C. Section 522. Simply put, these Federal exemptions are NOT usable in California. Instead of the Federal Bankruptcy Exemption System, California has chosen to allow its' residents to choose between 2 different sets of asset protecting exemptions in a bankruptcy filing. These exemptions are found in Sections 703 and 704 of the California Code of Civil Procedure.

Understand that if you use the exemptions listed in Section 703, you cannot also use the exemptions found in Section 704. You must use one or the other. You cannot "mix and match" them.

Choosing the right exemption section is complicated because of court cases that interpret laws differently. An example of this is the personal injury exemption under C.C.P. Section 703.140, which supposedly protects up to $15,000 in settlement proceeds. Unfortunately, the exemption wording is not clear and says "...not including pain and suffering or compensation for actual pecuniary loss..." While it may have been that the legislature had intended this was to allow an unlimited exemption amount for these items, the reality is that many Bankruptcy judges have ruled that "pain and suffering" and "pecuniary loss" have NO legal protection at all and belong to the Bankruptcy Trustee to pay your creditors.

Additionally, there are other California state exemptions and even some Federal exemptions that apply, even though California has "opted out" of the 11 U.S.C. Section 522 Federal exemption system.

Your reading of the "703" and "704" exemption sections will still be helpful to you as it will make it easier to understand the reasons your attorney chooses one over the other.

To read these code sections, click on the appropriate link:

703.010-703.140 Wild Card Exemptions
704.010-704.210 General Exemptions
704.710-704.850 Homestead Exemptions
704.910-704.995 Declared Homestead Exemptions

Exemption Laws for Other States, Click Here