Retaining Your Assets In Bankruptcy

Exemption Laws

Bankruptcy Estate

The filing of a bankruptcy case creates a "Bankruptcy Estate". The estate consists of all of your assets (everything you own or have a present, future, or contingent equitable or legal interest in) whether tangible or intangible, regardless of the actual location of the property or any encumbrance thereon. A debtor is required to honestly and accurately schedule all of their assets with the Bankruptcy Court. At the same time the bankruptcy case is filed, the Court appoints a bankruptcy trustee.

Trustees Duties

Part of the bankruptcy trustee's duties is to administer the bankruptcy estate. In a chapter 7 case, the trustee reviews the schedules and examines the debtor under oath as to the truth and accuracy thereof. If the trustee identifies property which can be liquidated (we call this "non-exempt property"), it is the trustee's obligation to see that liquidation actually takes place (or in some cases some other arrangements are made) allowing the trustee to pay dividends to creditors in the order of their priority and secured interests.

In a chapter 13 case (repayment plan), part of the trustee's duties is to ensure that creditors receive payments over the life of the plan (usually three to five years) which equal at least as much as they would have received under a chapter 7 liquidation analysis. Additionally, chapter 13 trustees administer the estate by making payments throughout the duration of the plan to scheduled creditors who have had their claims accepted and approved by the Court.


A long, long time ago, all assets were liquidated in bankruptcy proceedings. This resulted in many naked and homeless people who were forced to incur new debt to replace their liquidated assets, and/or become dependent upon the state. The solution? Allow debtors to retain the basic necessities of life. Federal laws went into effect which set forth what property is a necessity worthy of protection (or as we say, "exempted from liquidation").

Partly due to the fact that the cost of living across the United States varies from state to state, several states have opted out of the Federal Exemptions and have decided to implement their own Exemption Laws. California is one such "opt out" state, and actually has two sets of Exemption Laws. These Exemption Laws can be found in the California Code of Civil Procedure under Sections 703 and 704. There are significant differences between the two sets of Exemption Laws, and an experienced attorney will work with you and advise you which set would best serve you in protecting your property.

The following chart sets forth some of the differences between the two sets of Exemption Laws. This is by no means an exhaustive list; it is set forth below merely to illustrate some of the differences between the sets.

California has two sets of exemptions Code of Civil Procedure 703, 704.



    Laguna Hills Bankruptcy
    25401 Cabot Rd.
    Suite 113
    Laguna Hills, CA 92653
    Call 888-362-6529

    Santa Ana Bankruptcy
    930 West Seventeenth St.
    Suite C
    Santa Ana, CA 92706
    Call 714-795-3536

    Corona Bankruptcy
    1411 Rimpau Ave.
    Suite 108
    Corona, CA 92879
    Call 909-708-4597

    Moreno Valley Bankruptcy
    24490 Sunnymead Blvd.
    Suite 101
    Moreno Valley, CA 92553
    Call 951-579-4756

    Watsonville Bankruptcy
    444 Airport Blvd.
    Suite 109
    Watsonville, CA 95076
    Call 888-362-6529

    Oceanside Bankruptcy
    1930 S Coast Hwy
    Suite 206
    Oceanside, CA 92054
    Call 760-450-3333

    Chula Vista Bankruptcy
    333 H Street
    Suite 5000
    Chula Vista, CA 91910
    Call 619-500-6535

    Escondido Bankruptcy
    320 East 2nd Ave.
    Suite 108
    Escondido, CA 92025
    Call 760-746-4476

    La Mesa Bankruptcy
    4817 Palm Ave.
    Suite I
    La Mesa, CA 91942
    Call 619-462-362

    San Diego Bankruptcy
    185 West F St
    Suite 100
    San Diego, CA 92101
    Call 619-234-3626