When you are filing for bankruptcy relief you always want to protect your property. If you do not protect your property, it could be sold to pay all or part of you creditor claims. To protect your property you must exempt the property.
In California, individuals filing for bankruptcy must choose between two sets of exemptions:
California Code of Civil Procedure Section 704 et. al (referred to as the “704 exemptions” and Civil Procedure Section 703.140 (referred to as the “703 exemptions”).
For those without real property, the 703 exemptions are advantageous because they include a “wild card” or “grubstake” exemption that currently allows for the protection of approximately $34,000 of any type of asset, including cash and investments.
Until recently the law stated that a married person filing for bankruptcy without their spouse cannot select the 703 exemptions without their spouse’s consent.
This requirement was originally intended to ensure that a spouse filing for bankruptcy alone would claim the house exempt under the 704 exemptions.
The issue arose when the non-filing spouse cannot be located or choose not to consent to the other spouse selecting the 703 exemptions (think post-divorce complications), including the wild card exemption. To address this problem, recent California amendments eliminated the need for an estranged spouse’s consent to the election of 703 exemptions, provided that the couple does not jointly own a house that can be claimed exempt under the 704 exemptions, which offers a much larger homestead exemption. The change is found in CCP 703.140(a)(2)(B).
The change in the law now benefits all those who want to file bankruptcy and use the 703 exemptions and not have to worry about getting their ex-spouse involved.
If you have questions about this law give David A. Arietta a call at (925) 472-8000.