Apr 25, · California’s homestead exemption is the Super Hero of the exemption world. While other exemptions protect things worth a thousand dollars here and a couple of thousand there, the homestead protects big bucks. It’s $75, for a single person and $, for a couple. California provides a special homestead exemption for seniors age 65 and over, people who are disabled, and people age 55 and over with low incomes. (A homestead is your primary residence.) If the equity in your home is more than the exemption, and you file for bankruptcy under chapter 7, your home may be sold to pay creditors. Dec 09, · A homestead, in the California homestead exemption codes, means a person's home. If you own and live in a house, condo, mobile home or boat, it qualifies as a homestead in this context.
Related videosHow Can the Homestead Exemption Protect Your Home from Creditors?
California also offers an automatic homestead exemption, that does not require filing a declaration. However, your decision requires some consideration of which homestead choice is the best option for you. A homestead declaration may or may not give you either long-term or total protection from court judgment liens filed by creditors against your home. Unlike some other states, California offers a homestead exemption to everyone who owns a home and lives in it.
Your home need not be a single-family dwelling. If you live in a condo, motor home or on a boat that you own, you qualify for the exemption. Along with the homestead exemption offered by California, you may declare a homestead by filing a single-page document with the County Recorder. Filing a declaration of homestead does not increase the exemption maximum amounts, but does offer some extra protection. Most importantly, unlike the automatic exemption, your homestead is not automatically lost or canceled after your home is voluntarily or involuntarily sold.
Declaring a homestead also protects your proceeds for six months after your home is sold. In California, with its automatic homestead exemption, you may or may not want to file a homestead declaration. If you have little or no equity in your home, little advantage is to be gained. The homestead exemption was designed to assure judgment debtors a place to live, even if they owed money to creditors.
Unfortunately, the amount of the homestead has fallen way behind the value of the typical California home. More about the limitations on homestead protection. A creditor who seeks to levy on a homestead has a large burden in court. All of those claims are senior to the judgment creditor. So, when you encumber your home as part of the purchase transaction, or tap the equity through a HELOC or refinance, you give the lender the right to foreclose on your home without regard to your homestead. Own your home and you automatically have a homestead exemption.
CCP If you choose to sell your home and a creditor has recorded a judgment lien that attaches to your property, the judgment creditor gets paid from the sale before you get your homestead. The exempt proceeds remain protected for six months from the voluntary sale of the home. That six month period is intended to provide a window in which you can reinvest the homestead in a replacement home. We need a legislative fix. When a married couple is entitled to a homestead, but the debt is an obligation of only one spouse, the debtor spouse can assert the entire homestead available to a married couple.
One of my cases established this proposition in a bankruptcy case. When only one spouse filed bankruptcy and only his half of a tenancy in common came into the bankruptcy estate, he could still claim the entire exemption available to a married man.