California Bankruptcy Exemptions: What Can I Keep in Chapter 7 (2021 update)
People really do lose things in Chapter 7 bankruptcy. No, really. Just because your cousin’s mailman filed Chapter 7 and kept their 17 houses and baseball card collection, that doesn’t mean you’ll keep your car. Each state has rules about what you can keep in Chapter 7. In Los Angeles County — where the Antelope Valley is — these are ruled by the California bankruptcy exemptions.
I’m a California bankruptcy lawyer, so this piece only applies to California. If you googled “can I keep my house and car in a Chapter 7” and you landed here from another state, find a bankruptcy lawyer that’s local to you. If you’re anywhere in Los Angeles County, let’s set up a consultation by video.
Can I keep my car in a Chapter 7?
If the most valuable thing you have is a car and only one car, generally speaking California bankruptcy exemptions let you keep your car in a Chapter 7. If you’re like most people, the loan is more than the thing is worth. If that’s the case, as long as you stay current on the payments and complete the reaffirmation agreement, people often keep their car. Consult with a local bankruptcy attorney to be sure.
Can you keep your house in a Chapter 7 bankruptcy?
Short answer: Yes, if the equity is exempt and you stay current on payments. Equity is partially determined by home values. In post-pandemic 2021, property values locally have skyrocketed with people competing to buy homes over list price.
But it’s less risky in 2021 than it was in 2020 to file Chapter 7 if you’re financing a home. Why? California bankruptcy exemptions took effect in early 2021 that lets you keep your house in a Chapter 7 bankruptcy in more cases than in years prior. This is because the California homestead exemption increased dramatically based upon the county in which you live and other factors that are hard to determine.
And again, if your home is exempt, of course, you need to be current and stay current on payments.
READ MORE: More information about Chapter 7 bankruptcy and homes
You want to be sure about the value before you file the case. You want to be sure about your California homestead exemption amount.Â Again, you really want to meet an AV bankruptcy lawyer and go with a pro before you file. You’re literally gambling your house.
Can I keep my house and a car in a Chapter 7?
This is where Chapter 7 bankruptcy trustees get you. Maybe you threaded the needle and protected your home. But can you keep your house and a car in Chapter 7? Not always. If you were able to use California bankruptcy exemptions to keep your house, you have very little leftover protection. What’s left will cover your hubcaps and your Alpine stereo. It’s possible under the right circumstances to keep your house and car in a Chapter 7 bankruptcy, but you really, really want to meet an Antelope Valley bankruptcy attorney first.
Can I keep my house and my tax refunds in Chapter 7 bankruptcy?
Even if you can keep your house in Chapter 7 bankruptcy, kiss your tax refunds goodbye. Probably not. But look at the bright side, you may be able to keep your home, so partial win, especially on the important item? There are strategies on how you can keep both, but consult your local bankruptcy attorney.
So if I file bankruptcy I lose things?
Many people really do lose things in bankruptcy because they filed the wrong chapter. Sometimes, it’s better to make affordable monthly payments and keep your stuff. This is one of the many good reasons people file Chapter 13 bankruptcy, which is like debt consolidation.