Starting on January 1, 2021, the California homestead exemption is increased to at least $300,000 but up to $600,000 for every homeowner. The amount depends on the countywide median sale price for a single-family home in the calendar year prior to the calendar year Debtor claims the exemption.
How does the Increase in California Homestead Translate to Bankruptcy Filing?
More Debtors would file for Chapter 7 Bankruptcy
Debtors who qualify for Chapter 7 Bankruptcy through the means test but would filed for Chapter 13 Bankruptcy because they have too much equity in their home. A Chapter 7 Trustee can liquidate your home if the amount of equity is greater the homestead exemption. Raising it to at least $300,000 will help many homeowners in Sacramento, Fairfield, and Stockton, California area. This will aid many Sacramento Chapter 7 Bankruptcy filers.
Reduce Chapter 13 Bankruptcy Plan Payment
However, if the equity in your home is still greater than the countywide median sale price, the higher exemption may lower your plan payment. One of the criteria of the amount a Sacramento Chapter 13 Bankruptcy filer will have to pay in her Chapter 13 Bankruptcy Plan payment is the value of properties in excess of the California exemption.
For more information on how the increase homestead exemption will affect your bankruptcy case, call Muoi Chea experienced Sacramento Bankruptcy Attorney in Sacramento, Fairfield, and Stockton, CA. Muoi Chea has over a decade experienced in representing Chapter 7 and 13 Bankruptcy consumers and small business owners in Sacramento and Modesto bankruptcy courts.