CA HOMESTEAD EXEMPTIONS

Federal bankruptcy law allows a person to discharge certain debts by filing a case in bankruptcy court, turning over all nonexempt property over to a trustee.  We make sure you get a discharge on all your debts but also keep all exempt real estate and personal property.

The discharge is a federal court order releasing you from all your dischargeable debts and orders creditors to stop collecting.  You are released from your debts and do not have to pay them.  Some debts are not dischargeable.  We make sure you can get rid of all your debts and can let you know in a free consultation whether your debts can be discharged.

1. Debts for certain taxes, including taxes that became due within the last three years;
2. If the creditor files a complaint and if the court so rules, debts for obtaining money, property, services, or credit by means of false pretenses, fraud, or a false financial statement (included here are certain debts for luxury goods or services and for certain cash advances made within 60 days before the case is filed);
3. Debts not listed on the debtor’s Chapter 7 papers, unless the creditor had notice or actual knowledge of the case in time to file a claim. The Sixth Circuit Court of Appeals has held that debtor’s omission of claim from schedules in a no asset case did not preclude discharge of claim because no deadline was set for filing proofs of claims, therefore, creditor received notice in time to permit timely filing of proof of claim. See In re Madaj, 149 F3d 467 (6th Cir. 1998);
4. If the creditor files a complaint and if the court so rules, debts for fraud, embezzlement, or larceny;
5. Debts for alimony, maintenance or support, with certain very limited exceptions;
6. If the creditor files a complaint and if the court so rules, debts for intentional or malicious injury to the person or property of another;
7. Debts for certain fines or penalties;
8. Debts for student loans, unless not discharging the debt would impose an undue hardship on the debtor and his or her dependents;
9. For death or personal injury caused by the debtor’s operation of a motor vehicle if such operation was unlawful because the debtor was intoxicated;
10. Debts that were or could have been listed in a previous bankruptcy case of the debtor in which the debtor did not receive a discharge;
11. Debts arising from any act or fraud or defalcation while acting in a fiduciary capacity committed with respect to any depository institution or insured credit union;
12. Debts which arose from the debtor’s malicious or reckless failure to fulfill any commitment to a federal depository institutions regulatory agency regarding the maintenance of capital of an insured depository institution;
13. Any payment of an order of restitution issued under Title 18, United States Code (added by the Violent Crime Control and Law Enforcement Act of 1994);
14. Loans incurred to pay federal taxes that would be nondischargeable pursuant to ‘523(a)(1);
15. If the creditor files a complaint and the court rules, debts, other than those covered in ‘523(a)(5) (subsection 5 above) that are incurred by the debtor in the course of a divorce or separation agreement that satisfy at least one of the following criteria: (a) the debtor does not have the ability to pay such debt from income or property of the debtor not reasonably necessary to be expended for the maintenance or support of the debtor or a dependent and if the debtor is engaged in a business, for the payment of expenditures necessary for the operation of such business; or (b) discharging such debt would result in a benefit to the debtor that outweighs the detrimental consequences to a spouse, former spouse, or child of the debtor;
16. Fee or assessments that become due after the filing of a petition to membership associations with respect to the debtor’s interest in a dwelling unit that has condominium ownership, or in a share in a cooperative housing corporation, but only for the period the debtor either lived in or received rent for the condominium or cooperative unit.

Everyone is eligible for a Chapter 7 discharge except the following persons:

• Those who have been granted a discharge in a Chapter 7 case filed within the last eight years;
• Those who have been granted a discharge in a Chapter 13 case filed within the last six years, unless payments under the plan in such case totaled 100% of the unsecured claims or 70% of such claims and the plan was proposed in good faith and was the debtor’s best effort;
• Those who file a waiver of discharge in their Chapter 7 case that is approved by the court;
• Those who conceal, transfer, or destroy their property with the intent to defraud their creditors or the trustee in the Chapter 7 case;
• Those who conceal, destroy, or falsify records of their financial condition or business transactions;
• Those who make false statements or claims in their Chapter 7 case, or who withhold recorded information from the trustee in the case;
• Those who fail to satisfactorily explain any loss or deficiency of their assets;
• Those who refuse to answer questions or obey orders of the bankruptcy court, either in their case or in the case of a relative, business associate, or corporation, or;
• The debtor is not an individual.

Any person, regardless of citizenship, who resides in, who does business in, or who has property in the United States may file under Chapter 7, except a person who has been involved in another bankruptcy case that was dismissed within the last 180 days on certain grounds.

It may not be wise, however, for a debtor to file under Chapter 7 if he is not eligible for a Chapter 7 discharge or if some of his debts will not be released by a Chapter 7 discharge.  In these cases, we can assist you with collection litigation defense, strategic default, debt settlement and/or other asset protection strategies.

Filing a Chapter 7 case automatically stops most lawsuits.  After filing, the court mails a notice to all creditors and lawyers ordering them to stop any further action against you.  We can notify creditors and their lawyers immediately upon filing if necessary.  Intentionally violating this court order may entitle you to damages.

Under California law, certain property is exempt and cannot be taken by creditors or by bankruptcy trustees.  If you are current on mortgage payments, you can keep your home if the unmortgaged exempt equity is less than $700,000 if you live in Los Angeles or Orange County.

About a month after filing a Chapter 7 case, there is a hearing called the “meeting of creditors” that is held via Zoom or telephone.  It lasts about 3-5 minutes and you will testify under penalty of perjury about your income, property, debts and financial affairs in the past four years before filing.

If you have no assets for the trustee to collect, your case will be closed shortly after you receive your discharge which is about four months after the filing date.

We perform the following in a Chapter 7 case in a typical consumer case:

1. Analyze the amount and nature of the debts owed by the debtor and determine the best remedy for the debtor’s financial problems. Sometimes it’s best not to file.  We often discuss alternatives to Ch. 7.
2. Advise the debtor of the relief available under both Chapter 7 and Chapter 13, and the advisability of proceeding under each chapter.
3. Assemble the information and data necessary to prepare the Chapter 7 forms for filing.
4. Prepare the petitions, schedules, statements and other Chapter 7 forms for filing with the bankruptcy court.
5. Assist you in arranging assets so that you retain as much as possible after the Chapter 7 case.
6. Filing the Chapter 7 petition, schedules, statements and other forms with the bankruptcy court, and, if necessary, notifying certain creditors of the commencement of the case.
7. If necessary, assisting the debtor in redeeming certain personal property and in setting aside certain mortgages or liens against exempt property.
8. Attending the meeting of creditors with the debtor.
9. If necessary, preparing and filing amended schedules and certain statements and other documents with the bankruptcy court in order to protect the rights of the debtor.