2021 is off to a good start. An increase in California homestead exemptions has been announced, which will allow California citizens to file for bankruptcy without having to sacrifice their homes starting January 1, 2021.
California Governor Gavin Newson approved the new legislation (Assembly Bill 1885) on September 18, 2020. Simply put, the new law will allow you to protect a greater amount of equity in your home should you decide to file for Chapter 7 or Chapter 13 bankruptcy. As California uses a state exemption system, this change will be crucial for the financial future of many Californians.
If you live in California and are drowning in debt, then this new law may be the perfect opportunity to file for bankruptcy and start your journey towards a fresh financial start. If you want your bankruptcy process to be efficient, the best way to achieve this is to work with an experienced Los Angeles bankruptcy attorney who is always available to you, and KT Bankruptcy Lawyer may be an excellent option.
KT Bankruptcy Lawyer is a California law firm committed to helping clients get a new financial start through bankruptcy. If you want to know how to take advantage of California’s new homestead exemption law and which chapter of bankruptcy best suits your case, feel free to contact them for a completely free consultation.
What is a homestead exemption?
First of all, it is important to define what household exemptions are. They protect the debtor’s home equity from creditors, up to a certain dollar amount. Debtors will not be able to obtain payment beyond the established amount to pay past due debts.
If the value of your home is not within the limits imposed by the state, you cannot exempt it from the bankruptcy process. That means your creditors will be able to file a lawsuit and take actions that may involve selling the property to pay the debt. In California, this was a relatively common occurrence, but the new legislation is designed to change that scenario.
How big was the increase?
The old California homestead exemption was up to $75,000 equity for a single homeowner and could increase to $100,000 or $175,000 depending on a variety of factors related to age, marital status, monthly income, etc.
However, the new law eliminates many of the qualifying conditions and states that the new homestead exemption amount will be at least $300,000 in counties where the average cost of sale of the properties was below that figure during the previous year. The maximum amount under the new legislation could be up to $600,000 in counties where the cost of the properties was higher.
What does this mean for California Homeowners?
Previously, many Californians overwhelmed by credit card debt, high medical bills, and other financial problems, very often realized that they didn’t qualify for Chapter 7 bankruptcy unless they were willing to surrender their homes in the process. For many, this meant leaving their families without a roof over their heads, and changing residence is not a possibility when you are drowning in debt. Therefore, many people couldn’t get the financial relief they so badly needed.
The new law will give more options to those who want to get rid of their debts without having to lose their home in the process.
Want to file for bankruptcy? Don’t do it alone!
If this new legislation seems like a perfect opportunity to file for bankruptcy to get rid of most of your debts, keep in mind that many people are probably thinking the same thing. You must act quickly to ensure that your process is not delayed by the overwhelming number of bankruptcy filings expected in California. Also, if you are unfamiliar with the bankruptcy process, working with a Los Angeles bankruptcy attorney may be the best decision you can make.
The team at KT Bankruptcy Lawyer offers completely free consultations and is always willing to take your call. Don’t hesitate to call them if you have further questions about your case.
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