Automatic Homestead Exemption

What property you get to keep is dictated by your exemptions, which are a set of laws that your lawyer will utilize to protect your equity in your assets.  The particular law that protects your equity in a home is called the homestead exemption, and it is a very powerful and generous protection.  Exemptions are set forth by Federal law, but the Federal law allows states opt out of the Federal exemptions to enact their own set of exemptions for use when residence of the state file for bankruptcy protection.  Not all states have exercised their right to opt out.  California is one of the states that has opted out.  Therefore, if you live in San Diego your exemptions are governed by the California rules set forth in the California Code of Civil Procedure.  When filing in San Diego, the Federal rules are largely irrelevant on the subject of homestead exemption.  There is one caveat: there is a residency requirement for filing bankruptcy such that if you have not continuously lived in California for the past two years, then the laws of a different state may apply or the Federal exemptions may apply.

What is the Automatic Homestead Exemption?

Under the California Code of Civil Procedure, San Diego bankruptcy filers can choose from one of two sets of exemptions: (1) the California exemptions; or (2) California’s Federal-like exemptions, which for the most part (but not 100%) mirrors the Federal exemptions and will hereafter be referred to as simply the Federal exemptions.  Both the California exemptions and California’s Federal-like exemptions have a homestead protection.  The homestead exemption is automatic for your home, and a homestead declaration is not needed to claim the exemption.  But filing a homestead declaration does have important benefits.

The Homestead Exemption

The homestead exemption is the particular exemption that states how much in equity in your home you are allowed to have, and still keep your home when you file bankruptcy.  If your equity in your home exceeds your exemption amount, then you would have to give up your home if you file bankruptcy.  Both the California exemptions and the Federal exemptions have a homestead exemption.  California’s exemption amount is much more generous than the Federal exemption.  The exemption amounts are spelled out on the Exemptions page, under the subheading “California Homestead Exemption.”

Automatic Exemption For Home

Frequently, a new client will call me and ask whether they need to file a “Homestead Declaration” or “Declaration of Homestead” in order to claim a homestead exemption in bankruptcy and protect their home. In California, the homestead exemption is automatic when you file bankruptcy, by virtue of your ownership of your home, provided that you are living at your property at the time of your bankruptcy filing and you continue to live there during the pendency of your bankruptcy case.  You don’t always need to have your attorney file a Homestead Declaration prior to bankruptcy to claim the exemption when you file bankruptcy San Diego.  As far as claiming the homestead exemption in bankruptcy San Diego, so long as you reside at your property on the day that you file for bankruptcy and continue to reside there during your bankruptcy, the exemption is automatic for residents of San Diego, California, and provided that your lawyer properly claims the exemption for you in your bankruptcy schedules.  But there are advantages to filing one.

Advantage to Filing Homestead Declaration

There are other important advantages to filing (recording) a Homestead Declaration.  As discussed more fully in our blog post about the benefits of filing a Homestead Declaration, filing one offers additional protection, such as preventing judgment liens from attaching to your property.

This entry was posted in Exemptions.


Comments are closed.

call buttonCall