What Can A Debtor Exempt From The Trustee’s Sale Of Assets?

In California bankruptcy filings, a debtor has the option of choosing between two different slates, or menus of exemptions from asset sales; “California” and “federal” exemptions. The assets on these lists can be used conjunctionally, and include such exemptions as certain portions of equity in the debtors primary residence, or homestead, basic furniture and fixtures in said residence, equity in the debtors automobile, and interests in certain amounts of jewelry, tools of the trade and other household goods, clothing and food. Other examples of exemptions are most types of life insurance policies, retirement plans, payments for disability claims, including social security and personal injury causes of action, veterans’ benefits, certain portions of alimony or child support payments and certain portions of wages.

The limits on exemptions apply to the debtors’ equity in the property being claimed in the exemption. For example, an automobile valued at $6500 that the debtor is making loan payments on has a loan balance of $5500, the equity value is only $1000. The value of an asset being claimed as an exemption is typically calculated at the current “fair market value,” not the original purchase price. Exemptions are generally allowed or approved within 30 days after the completion of the Meeting of Creditors, provided that there are no objections to the debtor’s claim of exemptions.

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