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2013 California Bankruptcy Exemptions

2013-04-26

 

Updated Bankruptcy Exemptions

The Bankruptcy Code allows each individual who files for bankruptcy to keep basic assets that are necessary for the debtor's “fresh start” after bankruptcy. That property is the debtor’s “exempt property.”

Property

Old

Effective 4/1/13

Homestead

$22,075

$25,575

Motor Vehicles

$3,525

$5,100

Household Items

$550

$650 (any particular item)

Wildcard

$1,175

$1,350

Tools of Trade

$2,200

$7,625

Life Insurance

$11,800

$13,625

Personal Injury

$22,075

$25,575

 

Assembly Bill No. 929

 

CHAPTER 678

 

An act to amend Sections 703.140, 703.150, and 704.730 of the Code of Civil Procedure, relating to debtor exemptions.

 

[Approved by Governor September 27, 2012. Filed with

Secretary of State September 27, 2012.]

 

AB 929, Wieckowski. Debtor exemptions: bankruptcy.

Existing law identifies property of a debtor that is exempt from all procedures for enforcement of a money judgment. Under existing law, those exemptions are available to a debtor in a federal bankruptcy case, whether a money judgment is being enforced by execution sale or other procedure, unless the debtor elects certain alternative exemptions. Existing law also provides that a specified portion of equity in a homestead, as defined, is exempt from execution to satisfy a judgment debt, and sets forth the amounts of the homestead exemptions available under specified circumstances. Existing law requires the Judicial Council to, every 3 years, adjust the amount of the exemptions described above based on the change in the annual California Consumer Price Index for All Urban Consumers, as specified.

This bill would increase the dollar amount of the exemptions for a debtor’s interest in motor vehicles, jewelry, and implements, professional books, or tools of the trade of the debtor or the debtor’s dependent.

This bill would, beginning April 1, 2013, and every 3 years thereafter, require the Judicial Council to submit to the Legislature the amount by which the dollar amounts of the homestead exemptions described above may be adjusted based on the change in the annual California Consumer Price Index for All Urban Consumers, as specified. This bill would also increase the amount of the homestead exemptions for persons 55 years of age or older who meet specified income criteria.

The people of the State of California do enact as follows:

SECTION 1.  Section 703.140 of the Code of Civil Procedure is amended to read:

703.140.  (a)  In a case under Title 11 of the United States Code, all of the exemptions provided by this chapter, including the homestead exemption, other than the provisions of subdivision (b) are applicable regardless of whether there is a money judgment against the debtor or whether a money judgment is being enforced by execution sale or any other procedure, but the exemptions provided by subdivision (b) may be elected in lieu of all other exemptions provided by this chapter, as follows:

(1)  If a husband and wife are joined in the petition, they jointly may elect to utilize the applicable exemption provisions of this chapter other than the provisions of subdivision (b), or to utilize the applicable exemptions set forth in subdivision (b), but not both.

(2)  If the petition is filed individually, and not jointly, for a husband or a wife, the exemptions provided by this chapter other than the provisions of subdivision (b) are applicable, except that, if both the husband and the wife effectively waive in writing the right to claim, during the period the case commenced by filing the petition is pending, the exemptions provided by the applicable exemption provisions of this chapter, other than subdivision (b), in any case commenced by filing a petition for either of them under Title 11 of the United States Code, then they may elect to instead utilize the applicable exemptions set forth in subdivision (b).

(3)  If the petition is filed for an unmarried person, that person may elect to utilize the applicable exemption provisions of this chapter other than subdivision (b), or to utilize the applicable exemptions set forth in subdivision (b), but not both.

(b)  The following exemptions may be elected as provided in subdivision (a):

(1)  The debtor’s aggregate interest, not to exceed twenty-four thousand

sixty dollars ($24,060) in value, in real property or personal property that

the debtor or a dependent of the debtor uses as a residence, in a cooperative

that owns property that the debtor or a dependent of the debtor uses as a

residence.

(2)  The debtor’s interest, not to exceed four thousand eight hundred

dollars ($4,800) in value, in one or more motor vehicles.

(3)  The debtor’s interest, not to exceed six hundred dollars ($600) in

value in any particular item, in household furnishings, household goods,

wearing apparel, appliances, books, animals, crops, or musical instruments,

that are held primarily for the personal, family, or household use of the

debtor or a dependent of the debtor.

(4)  The debtor’s aggregate interest, not to exceed one thousand four

hundred twenty-five dollars ($1,425) in value, in jewelry held primarily for

the personal, family, or household use of the debtor or a dependent of the

debtor.

(5)  The debtor’s aggregate interest, not to exceed in value one thousand

two  hundred  eighty  dollars  ($1,280)  plus  any  unused  amount  of  the

exemption provided under paragraph (1), in any property.

(6)  The debtor’s aggregate interest, not to exceed seven thousand one

hundred  seventy-five  dollars  ($7,175)  in  value,  in  any  implements,

professional books, or tools of the trade of the debtor or the trade of a

dependent of the debtor.

(7)  Any unmatured life insurance contract owned by the debtor, other

than a credit life insurance contract.

(8) The debtor’s aggregate interest, not to exceed in value twelve thousand eight hundred sixty dollars ($12,860), in any accrued dividend or interest under, or loan value of, any unmatured life insurance contract owned by the debtor under which the insured is the debtor or an individual of whom the debtor is a dependent.

(9)  Professionally prescribed health aids for the debtor or a dependent of the debtor.

(10)  The debtor’s right to receive any of the following:

(A)  A social security benefit, unemployment compensation, or a local

public assistance benefit.

(B)  A veterans’ benefit.

(C)  A disability, illness, or unemployment benefit.

(D)  Alimony, support, or separate maintenance, to the extent reasonably

necessary for the support of the debtor and any dependent of the debtor.

(E)  A payment under a stock bonus, pension, profit-sharing, annuity, or

similar plan or contract on account of illness, disability, death, age, or length

of service, to the extent reasonably necessary for the support of the debtor

and any dependent of the debtor, unless all of the following apply:

(i) That plan or contract was established by or under the auspices of an

insider that employed the debtor at the time the debtor’s rights under the

plan or contract arose.

(ii)  The payment is on account of age or length of service.

(iii)  That plan or contract does not qualify under Section 401(a), 403(a),

403(b), 408, or 408A of the Internal Revenue Code of 1986.

(11)  The debtor’s right to receive, or property that is traceable to, any of

the following:

(A)  An award under a crime victim’s reparation law.

(B)  A payment on account of the wrongful death of an individual of

whom the debtor was a dependent, to the extent reasonably necessary for

the support of the debtor and any dependent of the debtor.

(C)  A payment under a life insurance contract that insured the life of an

individual  of  whom  the  debtor  was  a  dependent  on  the  date  of  that

individual’s death, to the extent reasonably necessary for the support of the

debtor and any dependent of the debtor.

(D)  A  payment,  not  to  exceed  twenty-four  thousand  sixty  dollars

($24,060), on account of personal bodily injury of the debtor or an individual

of whom the debtor is a dependent.

(E)  A payment in compensation of loss of future earnings of the debtor

or an individual of whom the debtor is or was a dependent, to the extent

reasonably necessary for the support of the debtor and any dependent of the

debtor.

 

SEC. 2.  Section 703.150 of the Code of Civil Procedure is amended to read:

703.150.   (a)  On April 1, 2004, and at each three-year interval ending on April  1  thereafter,  the  dollar  amounts  of  exemptions  provided  in subdivision (b) of Section 703.140 in effect immediately before that date shall be adjusted as provided in subdivision (d).

 

(b)  On April 1, 2007, and at each three-year interval ending on April 1 thereafter, the dollar amounts of exemptions provided in Article 3 (commencing with Section 704.010) in effect immediately before that date shall be adjusted as provided in subdivision (d).

(c)  On April 1, 2013, and at each three-year interval ending on April 1 thereafter, the Judicial Council shall submit to the Legislature the amount by which the dollar amounts of exemptions provided in subdivision (a) of Section 704.730 in effect immediately before that date may be increased as provided in subdivision (d). Those increases shall not take effect unless they are approved by the Legislature.

(d)  The Judicial Council shall determine the amount of the adjustment based on the change in the annual California Consumer Price Index for All Urban Consumers, published by the Department of Industrial Relations, Division of Labor Statistics, for the most recent three-year period ending on December 31 preceding the adjustment, with each adjusted amount rounded to the nearest twenty-five dollars ($25).

(e)  Beginning April 1, 2004, the Judicial Council shall publish a list of the current dollar amounts of exemptions provided in subdivision (b) of Section 703.140 and in Article 3 (commencing with Section 704.010), together with the date of the next scheduled adjustment. In any year that the Legislature votes to increase the exemptions provided in subdivision (a) of Section 704.730, the Judicial Council shall publish a list of current dollar amounts of exemptions.

(f)  Adjustments made under subdivision (a) do not apply with respect to cases commenced before the date of the adjustment, subject to any contrary rule applicable under the federal Bankruptcy Code. The applicability of adjustments made under subdivisions (b) and (c) is governed by Section 703.050.

 

SEC. 3.  Section 704.730 of the Code of Civil Procedure is amended to read:

704.730.   (a)  The amount of the homestead exemption is one of the following:

(1)  Seventy-five thousand dollars ($75,000) unless the judgment debtor or spouse of the judgment debtor who resides in the homestead is a person described in paragraph (2) or (3).

 

(2)  One hundred thousand dollars ($100,000) if the judgment debtor or spouse of the judgment debtor who resides in the homestead is at the time of the attempted sale of the homestead a member of a family unit, and there is at least one member of the family unit who owns no interest in the homestead or whose only interest in the homestead is a community property interest with the judgment debtor.

 

(3) One hundred seventy-five thousand dollars ($175,000) if the judgment debtor or spouse of the judgment debtor who resides in the homestead is at the time of the attempted sale of the homestead any one of the following:

(A)  A person 65 years of age or older.

(B)  A person physically or mentally disabled who as a result of that

disability is unable to engage in substantial gainful employment. There is

a rebuttable presumption affecting the burden of proof that a person receiving disability insurance benefit payments under Title II or supplemental security income payments under Title XVI of the federal Social Security Act satisfies the requirements of this paragraph as to his or her inability to engage in substantial gainful employment.

(C)  A person 55 years of age or older with a gross annual income of not more than twenty-five thousand dollars ($25,000) or, if the judgment debtor is married, a gross annual income, including the gross annual income of the judgment debtor’s spouse, of not more than thirty-five thousand dollars ($35,000) and the sale is an involuntary sale.

(b)  Notwithstanding any other provision of this section, the combined homestead exemptions of spouses on the same judgment shall not exceed the amount specified in paragraph (2) or (3), whichever is applicable, of subdivision (a), regardless of whether the spouses are jointly obligated on the judgment and regardless of whether the homestead consists of community or separate property or both. Notwithstanding any other provision of this article, if both spouses are entitled to a homestead exemption, the exemption of proceeds of the homestead shall be apportioned between the spouses on the basis of their proportionate interests in the homestead.

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