Exemption Law Question

[Moneypenny]

Hi there,

I am trying to interpret the exemption law in CA as the last piece in the puzzle of what I am going to do. I had three questions specifically.


1. Under one option, you can keep 75 percent of wages, under another, wages are not exempt. What if you are reaffirming a mortgage, equity and car loans, are you supposed to forfeit all your wages and then go bad on those loans? I dont get how that is supposed to work under either option, at 75 or 100 percent of losing your wages.

2. I am unclear if the car value exemption applies to all the cars in a family or to one for each spouse. I know the value of one car we have is less than 2000. What if the other car was new, driven off the lot and so technically upside-down, and re-affirmed. I assume that would be zero value, although the car itself would be worth a lot (but owned by the lien holder, right?)

I am upside down in my house, have some exercise equipment, some fairly low value furniture, perhaps some cash (who knows) and will definitely have my regular wages every month including before and after filing. I especially dont get the wage thing: what if you already spent the wages you made 30 days before filing, not to mention my other questions. I am totally confused on this one.

here is the CA law for reference:

http://www.thebankruptcysite.org/exemptions/california.html

thanks,

Mr. Moneypenny

[freedom7]

since you are underwater on your home, you don't have to use the homestead exemption for that, I would then use the allowable, unused portion of the homestead(wildcard) under system 2 on the wages or car, which can be doubled with your spouse in some states.

The new car has no value, so no exemption needed there either.

In system 1 it says minimum 75%, plus exemption for money already in bank account, so maybe that works for the difference.

[Moneypenny]

Oh, I see! You are referring to:

703.140(b)(5) - $15,000 of any property, less any claim for homestead or burial plot.

703.140(b)(5) - $1,100 of any property. The unused portion of the burial or household exemption for any property.


Since I have no home equity and no burial plot, then the entire homestead exemption of of 15k plus hoemstead $20,075 is a wildcard? That's awesome! Other filers should give me their property to hold cause I still have tons left over from the $35, 075! (just kidding).

If that is right I lose no property because I dont have more than a couple grand in assets.

So my last question is about wages and how I can reaffirm my secured loans if, as in sys 2, my wages are not protected? I am also unclear what you meant about money in bank account: I did not catch anything about that in the exemptions. Does money count as property? I doubt it. So what about money in the bank and wages that I need to pay my secured debts?

thanks,

MMP

[2manybills]

Actually the total wildcard is $21175.

Basically, the wages you would be exempting is the cash in the bank on the date you filed. So while we filed on 7/3/09, right after our paydays, I paid the bills and our mortgage and only had $800 left in the bank. That was the amount listed in our exemptions.

Also, if you are keeping your house, I'm sure your attorney will tell you to "ride through" not reaffirm the mortgages but continue to make your payments if you are upside. Then should something change and the market continues to worsen, or you cannot continue to pay your house you can walk away and since it was part of your BK you won't be on the hook for any deficiency balance should one exist.

[Moneypenny]

I dont get: isnt the combination of unused portion of homestead 20,075 plus 15 k of any property 35+? (not that I need that much exemption)

And there is no exemption for wages under system 2. But, your answer does provide me a clue about something: so "wages" here means cash in the bank? I was wondering why people are talking about cash when there is no mention of cash in the code. So cash is wages. Under system 2, I must surrender any unused portion of the wages 30 days prior to filing. Is that right?

And what about wages or cash in the bank earned after filing, but before the 341? What about wages earned after 341 but before discharge?

Any light you can shed will be much appreciated!

MMP

[2manybills]

It means what is the bank on the day you filed. What you put in the bank after that is different, but again you want to be showing that your regular monthly expenses, i.e. mortgage, cars, insurance, etc. groceries etc. are being used. I've kept track of all of my spending just to be safe, although we are going today and none of my records have been asked for.

[2manybills]

Sorry another thought.

As for the exemptions, they way it will work is like this for example: The car exemption is something like $2800 (give or take). One of cars is valued at $7600. We owe $800 on the car. Leaves net value of $6800.00. You deduct the $2800 car deduction and then what is left comes out of your wildcard exemption.

We did the same with my husband's tools of trade.

[jribe]

75% in wages is refrencing garnishments (in CA a creditor can request up to 25%) it sounds like you qualify under system 2: to use the $20k un used homestead exemption, plus the wildcard (1k i believe). That should cover your assets and your wages for sure.
They seperate things out a little weird in CA- but if you can get everything under the 20k exemption it will work. Keep in mind- you get the other exemptions too for furniture, clothes, jewlery etc. You cannot double exemptions in CA (no doubling for spouses) so both cars would be included; however you do have the 20k to make the difference on what's no exempt. Most people find they have plenty of room on system 2.

Hi there,

I am trying to interpret the exemption law in CA as the last piece in the puzzle of what I am going to do. I had three questions specifically.


1. Under one option, you can keep 75 percent of wages, under another, wages are not exempt. What if you are reaffirming a mortgage, equity and car loans, are you supposed to forfeit all your wages and then go bad on those loans? I dont get how that is supposed to work under either option, at 75 or 100 percent of losing your wages.

2. I am unclear if the car value exemption applies to all the cars in a family or to one for each spouse. I know the value of one car we have is less than 2000. What if the other car was new, driven off the lot and so technically upside-down, and re-affirmed. I assume that would be zero value, although the car itself would be worth a lot (but owned by the lien holder, right?)

I am upside down in my house, have some exercise equipment, some fairly low value furniture, perhaps some cash (who knows) and will definitely have my regular wages every month including before and after filing. I especially dont get the wage thing: what if you already spent the wages you made 30 days before filing, not to mention my other questions. I am totally confused on this one.

here is the CA law for reference:

http://www.thebankruptcysite.org/exemptions/california.html

thanks,

Mr. Moneypenny

[jribe]

money does count. you'll list what you have "in cash" on your schedules.. But obviously they won't be checking under the mattress... lol

Oh, I see! You are referring to:

703.140(b)(5) - $15,000 of any property, less any claim for homestead or burial plot.

703.140(b)(5) - $1,100 of any property. The unused portion of the burial or household exemption for any property.


Since I have no home equity and no burial plot, then the entire homestead exemption of of 15k plus hoemstead $20,075 is a wildcard? That's awesome! Other filers should give me their property to hold cause I still have tons left over from the $35, 075! (just kidding).

If that is right I lose no property because I dont have more than a couple grand in assets.

So my last question is about wages and how I can reaffirm my secured loans if, as in sys 2, my wages are not protected? I am also unclear what you meant about money in bank account: I did not catch anything about that in the exemptions. Does money count as property? I doubt it. So what about money in the bank and wages that I need to pay my secured debts?

thanks,

MMP

[jribe]

for clarity: you don't get the 15k and the 20k. It's one or the other. If you re-read it it says " 15k of any property less any claim for homestead or burial plot" meaning you get one or the other. Take the higher, which is 20,725...

Oh, I see! You are referring to:

703.140(b)(5) - $15,000 of any property, less any claim for homestead or burial plot.

703.140(b)(5) - $1,100 of any property. The unused portion of the burial or household exemption for any property.


Since I have no home equity and no burial plot, then the entire homestead exemption of of 15k plus hoemstead $20,075 is a wildcard? That's awesome! Other filers should give me their property to hold cause I still have tons left over from the $35, 075! (just kidding).

If that is right I lose no property because I dont have more than a couple grand in assets.

So my last question is about wages and how I can reaffirm my secured loans if, as in sys 2, my wages are not protected? I am also unclear what you meant about money in bank account: I did not catch anything about that in the exemptions. Does money count as property? I doubt it. So what about money in the bank and wages that I need to pay my secured debts?

thanks,

MMP

[Moneypenny]

So are you guys saying that cash counts as personal property? so besides my several hundred dollars worth of exercise equipment and 1,300 worth of cars, I can keep thousands of dollars cash? Not that I have it.

i dont get the part about wage garnishments. they can garnish my wages in a ch7? For how long? or just the 30 days before I file? what if I need those wages to pay my reaffirmed loans and to eat, etc., as shown on my sched j?

thanks!

MMP

[mamaluv]

Yep, you could exempt thousands of dollars of cash...however if I had thousands of dollars I'm sure I wouldn't be in this situation! lol I had about $1500 in the bank on the day I filed.

[jribe]

okay; how the 75% works is that if you didnt have enough exemptions left to cover your wages 30 days before you file (last months wages) - let's say you made $5000; they could take 25% of that; which would be roughly $1250.

If you can cover your last 30 days wages in your exemptions (sounds like you can) then you will keep all your wages.

make sense?

As far as garnishments go; if a creditor sues you and gets a judgement - then they can garnish your wages up to $25%. If you file BK 7 it will stop the garnishment.

So are you guys saying that cash counts as personal property? so besides my several hundred dollars worth of exercise equipment and 1,300 worth of cars, I can keep thousands of dollars cash? Not that I have it.

i dont get the part about wage garnishments. they can garnish my wages in a ch7? For how long? or just the 30 days before I file? what if I need those wages to pay my reaffirmed loans and to eat, etc., as shown on my sched j?

thanks!

MMP

[Moneypenny]

thanks! partly i am reasking questions because some of it is very counterintuitive (like being able to keep thousands in cash when you are bankrupt) and sometimes a particular phrasing catches me off-guard.

here is one:

"As far as garnishments go; if a creditor sues you and gets a judgement - then they can garnish your wages up to $25%. If you file BK 7 it will stop the garnishment."

This confuses me because this 25% limit on garnishment seems to be part of the ca bankruptcy exemption code. So the way i am reading this statement it says, before you file bk a creditor can take 25% of wages, according to bk code that you haven't filed for yet. So why does it apply? After you file, garnishment stops, so what is the purpose of the 25% limit in bankruptcy code if filing stops it?

I hope you see how I am misunderstanding the statement. Can you put it another way?

Sorry for being dumb! Bet you would be surprised at how high my level of education goes and where i got my degree! hee hee

MMP

[2manybills]

You're getting confused by mixing all of this attachment with exemption stuff. In California the only money that we exempted on our schedules was the money that was in the bank on the date that we filed. Period. You attach your paystubs for 60 days before you file. But that's for them to confirm your salary on the means test and on the schedules.

Garnishments occur post judgment when a creditor has sued you. Also, if you have money in the bank at like BofA and you owe them money, they can freeze the money you have in your account. As soon as you file, a stay of execution goes into place and they have to stop attaching. Does not mean they will let go of what they have collected prefiling. They won't. When they attach wages from your employer, they can take 25% of your wages. When they attach your bank account, they take whatever cash is there on that day.