California Bankruptcy Exemptions
How the California bankruptcy exemptions are affected by new federal laws
The proper designation of California bankruptcy exemptions is vital for retaining exempt assets. In Chapter 7 bankruptcy cases, claim form H must be included within the schedules filed with the clerk, and each specific asset claimed must be supported by an applicable statute. In California, state residents are prohibited to claim Federal exemptions provided by Section 522 of the Code. Alternatively, Californians are permitted to choose between two different lists of bankruptcy exemptions. For most state residents, the homestead allowances seems quite low compared to real estate property values nationwide, yet are nevertheless substantially higher than the average state exemption across the U.S.
Federal preemption of state bankruptcy exemptions
Following the effective date of the new bankruptcy laws contained in the Federal Code, a new maximum value for homesteads was established recently. This maximum value is tied to the consumer price index, and currently does not affect California residents. In the future, either the state or federal exemption statue may be amended at any time, and California homestead exemptions could be further limited by Washington. Approximately fifteen state statutes so far have been preempted.