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California Wildcard Exemption in Bankruptcy - How Is It Used?

When you file for bankruptcy in California, the law allows you to keep certain assets and property away from the reach of creditors. There are two sets of bankruptcy exemptions that are utilized in California to determine what property you can keep after filing for bankruptcy. The bankruptcy exemptions detail what type of property you are allowed to keep after filing for bankruptcy.

You can select either Section 703 or 704 bankruptcy exemptions in California. If you select the 703 California bankruptcy exemptions then you can utilize the wildcard exemption. Section 704 does not contain a wildcard exemption , but has more specific exemptions intended to protect specific items in bankruptcy.

How Does the Wildcard Exemption Work?

The wildcard exemption under Section 703 allows you to protect up to $1,280.00 in any item that you wish to keep in the bankruptcy. This wildcard can be increased to a  total $25, 340. The wildcard is increased when you do not use the homestead protection to protect equity in your home. The unused portion of the homestead protection can be added to your wildcard to protect other items. This is how it works:

Homestead Protection Available Under Section 703= $24,060

Example 1

If your home is worth $250,000 and you owe $300,000, then there is no equity in your property to protect.

The unused homestead of $24,060 is added to the wildcard of $1,280 for a total wildcard of $25,340.00

Example 2

If your home is worth $250,000 and you owe $240,000, then you have $10,000 in equity in your home.

You will use $10,000 of the $24,060 to protect the equity in your home.

Unused portion of $14,060 will be added to the wildcard of $1280 for total wildcard of $15,340.00

What Can You Protect With the Wildcard?

Once you determine how much of the wildcard is available to protect your property then you can utilize the amount to protect any property you wish up to the total amount of the wildcard. You can utilize the wildcard to protect:

  • Cash
  • Tax Refunds
  • Stocks and Bonds
  • Equity in Vehicles
  • Money in Bank Accounts
  • Real Estate Equity
  • Collectibles
  • Art
  • Antique
  • Jewelry
  • Household Items
  • Sports Equipment
  • Accounts Receivables
  • Inventory

You should consult with a local bankruptcy attorney to confirm that you can protect an item or asset in bankruptcy. Failure to do this could result in an asset being liquidated in the bankruptcy to pay creditors with.



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