Question about CA Version 1 & 2 exemptions

[JJCA]

In Version 2, of CA exemptions it says you can keep:

Homestead
703.140(b)(1) Real or personal property, including co-op, used as a residence up to $20,725.

It also says, for example:
Personal Property
703.140(b)(2) - Motor vehicle up to $3,300.
703.140(b)(3) - Clothing, household goods, appliances, furnishings, animals, books, musical instruments and crops up to $525 per item.
703.140(b)(4) - Jewelry up to $1,350.
703.140(b)(5) - $15,000 of any property, less any claim for homestead or burial plot.
And so on...

Question: Are the items on the list in ADDITION to the $20,725 homestead exemption, or a total UP TO $20,725 no matter where those exemptions are coming from?

I should clarify the same for Version 1, where it says:

Homestead
704.730 Real or personal property occupied at time of filing for bankruptcy, including mobile home, boat, stock cooperative, community apartment, planned development or condominium, up to the following limits: $50,000 if single and not disabled; $75,000 if family and no other member has homestead; etc...

Personal Property
704.010 - Motor vehicle or insurance if vehicle lost, destroyed or damaged up to $2,550.
704.020 - Food, clothing, appliances and furnishings.
704.030 - Building materials to repair or improve home up to $2,700.
704.040 - Jewelry, heirlooms and art up to $6,750 total.
And so on...

As with my first question, are the amounts on the list "in ADDITION to" the homestead exemption?

Also, if I have less than $75,000 equity in the home, can the difference apply to other items on the list, like equity above $2,550 in the vehicles? Or if I take the homestead exemption in Version 1, does it automatically mean any equity above $2,550 in vehicles (we have 2) will be sold & used to repay creditors? No matter how little equity I have in the homestead.

It seems like If I take Version 1, I can keep/protect my home (with about $30,000 -$50,000 equity in it) but I lose everything else including my cars. It is as if you get the house & nothing else basically. If I/we go with Version 2, we can keep cars, and such up to $20,725, but put our house at risk to be sold. I am having a hard time seeing how this will help us get a fresh start. Yes, we may be debt free...but we will either have a house & no cars, no cash & so on or we will have no house, but 2 vehicles and a few thousand to live on...which will last 2-3 months max...since we have to live somewhere!! I hate to file BK, but can't survive like this, and yet need to know we can survive AFTER BK or else 'whats the point'!!

It seems I have read/heard so many times, you can file BK and keep your home, your cars, a few resources (within reason)...but sure doesn't seem like that is true. So...Is this really how it is, or am I reading things wrong?

Thanks..
JJ

PS: I am married & may be considered disabled so homestead in version 1 would be 75,000 - 150,000.

[debee]

The totals are separate. You get the house amount according to whichever system you choose, plus the separate car amount, plus the separate amount for the jewels, plus the blah-blah from the next category and so on.

Also, it looks like your info is outdated. This link will take you to LadyInTheRed's blog here on bkforum. She maintains an updated resource for CA exemptions: http://www.bkforum.com/blog.php?22385-LadyInTheRed

Welcome to the forum.

[momofthree]

The personal property exemptions are IN ADDITION to the homestead. You do NOT get the wildcard exemption if you're protecting home equity. It's either/OR, not both. If you're worried about losing your cars, you could always just buy new ones with no equity (financed fully). Amazingly, that's acceptable.

[ready2puke]

#1 has exempt reg IRA's and #2 only has the other kind of IRA's being exempt (but it also has a total wildcare of over 21k)...someone had asked me on one of my threads about IRA's not being exempt...here is the difference..
I will be using Version 2...

[JJCA]

Thanks for the replies..I am still not totally clear so let me ask a more direct question: (or at least one that may simplify things in my head!!)

If we went with CA Version 2, I could protect UP TO $20,725 of HOMESTEAD equity..but nothing else? No personal property etc, because I am using all of my exemptions on the house equity. Is that correct?

Also using CA Version 2, I could protect up to $20,725 of PERSONAL property, if our home had NO EQUITY to protect, is that correct?

OR..I could in theory do a LITTLE of both, as long as it does not go over $20,725...right or wrong?

What I am trying to clarify in my head is, with Version 2, You get $20,725 MAX in exemptions. If you use all $20,725 in homestead exemptions, then all the value in your cars (for example) is subject to the trustee using it to pay your creditors, correct?

And then with CA Version 1, I could protect $75,000 of HOMESTEAD equity, it is in essence the same thing..except you get more HOMESTEAD protection. But you end up with less 'stuff' that can be exempted. Correct? Less protection for car values etc. You could end up with less personal property being protected.

Hopefully this will help me figure it out...thanks!!
JJ

Oh, the values I am using come from this site, under the exemptions tab. Just an FYI.
And I don't want to sell our cars, so I need to find out the best way to protect their equity.
I have no IRA to be concerned about.
Just want to protect the equity in my home and as much 'personal property' as I can.

[LadyInTheRed]

Thanks for the replies..I am still not totally clear so let me ask a more direct question: (or at least one that may simplify things in my head!!)

If we went with CA Version 2, I could protect UP TO $20,725 of HOMESTEAD equity..but nothing else? No personal property etc, because I am using all of my exemptions on the house equity. Is that correct? No, that's not correct. You would still get the personal property exemptions

Also using CA Version 2, I could protect up to $20,725 of PERSONAL property, if our home had NO EQUITY to protect, is that correct? Not exactly. You would have more than that because that number is not current and there is an additional wildcard.



OR..I could in theory do a LITTLE of both, as long as it does not go over $20,725...right or wrong? Right, you can use some of the homestead on the home and some of it on other property

What I am trying to clarify in my head is, with Version 2, You get $20,725 MAX in exemptions. If you use all $20,725 in homestead exemptions, then all the value in your cars (for example) is subject to the trustee using it to pay your creditors, correct? No, you still get the car exemptions and other personal property exemtpions


And then with CA Version 1, I could protect $75,000 of HOMESTEAD equity, it is in essence the same thing..except you get more HOMESTEAD protection. But you end up with less 'stuff' that can be exempted. Correct? Less protection for car values etc. You could end up with less personal property being protected. Yes, with system 1 you get a larger homestead exemption, but none of it can be used on personal property and you get lower personal property exemptions



Hopefully this will help me figure it out...thanks!!
JJ

Oh, the values I am using come from this site, under the exemptions tab. Just an FYI.
And I don't want to sell our cars, so I need to find out the best way to protect their equity.
I have no IRA to be concerned about.
Just want to protect the equity in my home and as much 'personal property' as I can.

The exemptions on that tab are not current because it does not include the increases effective 4/1/2010 based on the Consumer Price Index. Those are at http://www.courtinfo.ca.gov/forms/do...exemptions.pdf. The first page is system 1 exemptions and the 2nd page is system 2 exemptions. All exemptions may not be included, only the ones that get adjusted.

If you use version 2, you get both the $22,075 homestead exemption AND the personal property exemptions and a wild card exemption of $1,175, plus your unused homestead exemption. So, if you have $10,000 equity in your home, in addition to your homestead exemption you'll have a $12,075+$1,175 wildcard exemption to use on any property. You will also get the other personal property exemptions, including $3,525 for a car, unlimited household goods as long as no item is worth more than $550, etc.

The way I look at it, unless you have home equity in excess of $22,075, system 2 is a better choice. But, there could be other instances in which system 1 is a better choice.

[JJCA]

Thank You Lady In Red. That helped a lot!!!

We have one car with about 8,000 equity & a second car that has about 4,000 equity. In either version, what would happen with the cars since the allowance is only $3,525 for one car? Can we protect them or the equity in them? They are not new cars or luxury cars by any means. Just Toyota's that held value well!! :-)

JJ

[LadyInTheRed]

If you use System 1, you can buy back the non-exempt portion of the cars from the trustee. If you don't do that, the Trustee will be able to sell your cars, pay you the $2,725 exemption amount and distribute what's left after paying off any existing loans and taking his fee to your prioirty and/or unsecured creditors.

If you use System 2, you can use the $3,535 exemption towards the equity in one car and use the wild card exemption (including any unused portion of the homestead exemption) for the rest of the equity in that car and all of the equity in the second card. If you don't have enough wild card exemption to do that, you will need to buy back whatever portion you can't exempt or risk the trustee selling your car.

I just looked back at your original post. Since you have $30k-$50k in equity in your home, if you file Chap 7 and can't afford to buy back the non-exempt portion of your cars, you will have to make a choice between your home and your cars.

It seems I have read/heard so many times, you can file BK and keep your home, your cars, a few resources (within reason)...but sure doesn't seem like that is true. So...Is this really how it is, or am I reading things wrong?

People who have non-exempt assets to protect either decide it's worth it to give up the assets in order to get a quick chap 7 discharge or file a Chap 13. If they can't fund a Chap 13 that will pay the value of non exempt assets to their unsecured creditors within 5 years, they need to either part with the assets or find another way to deal with their debts. What's "within reason" is pretty subjective. We are fortunate in California to have generous exemptions compared to many states. Does that make our exemptions less reasonable or more reasonable? I guess that's a matter of perspective. I am sure there are people from other states reading this thread with envy over all we Californians can exempt.