California is unique in offering two exemption systems—often called System 1 (CCP § 704) and System 2(CCP § 703.140). Debtors filing Chapter 7 or Chapter 13 must choose one set of exemptions for the entire case; you cannot mix and match between systems. System 1 (704) typically benefits homeowners with substantial equity, while System 2 (703.140)provides a “wildcard” that can protect other assets. Below is a comprehensive breakdown of both systems, so you can compare and determine which best fits your situation.
Typically referred to as the “homeowner” set, System 1 is outlined in CCP §§ 704.010 - 704.210. Here, you’ll find higher homestead protections, among others:
| Asset | Description / Amount | Code Section | Notes |
|---|---|---|---|
| Homestead | $75,000 (single), $100,000 or $150,000 (family) under certain conditions, $175,000 if 65+, disabled, or meet specific criteria. | CCP §§ 704.710, 704.720, 704.730 | Protects equity in real/personal property used as residence; sale proceeds protected for 6 months. |
| Household Goods & Appliances | Fully exempt if necessary | CCP § 704.020 | Clothing, furnishings, and food are typically protected. |
| Bank Deposits (Social Security) | Up to $2,000 ($3,000 for married couple) | CCP § 704.080 | Deposits traceable to Social Security benefits. |
| Building Materials | Up to $2,000 | CCP § 704.030 | For repair/improvement of homestead. Not doubled for spouses. |
| Burial Plot | Fully exempt | CCP § 704.200 | |
| Health Aids | Fully exempt | CCP § 704.050 | Covers medical devices for debtor or dependents. |
| Jewelry, Heirlooms, Art | Up to $5,000 total | CCP § 704.040 | Not doubled for spouses. |
| Motor Vehicle | Up to $1,900 equity | CCP § 704.010 | Spouses cannot each claim $1,900 for the same vehicle. |
| Personal Injury / Wrongful Death | Proceeds needed for support; typically 75% if installments | CCP §§ 704.140, 704.150 | Covers pending lawsuits or recoveries for injuries or wrongful death. |
| Disability or Health Benefits | Fully exempt | CCP § 704.130 | |
| Fidelity Bonds | Exempt | Labor Code § 404 | |
| Homeowner's Insurance Proceeds | Protected for 6 months | CCP § 704.720(b) | Up to amount of homestead exemption if property damaged or destroyed. |
| Life Insurance Proceeds | If policy prohibits use for beneficiary's creditors | Ins. Code §§ 10132, 10170, 10171 | Matured life insurance benefits needed for support also exempt (CCP § 704.100). |
| Unmatured Life Insurance Policy Loan Value | Up to $8,000 | CCP § 704.100(b) | Spouses can double. |
| Business/Professional Licenses | Non-exempt | CCP § 695.060 | Licenses generally not subject to forced sale but may not be “exempt”. |
| Inmates' Trust Fund | Up to $1,000 | CCP § 704.090 | Not doubled for spouses. |
| Property of Business Partnership | Exempt from individual partner’s creditors | Corp. Code § 15025 | Partner's interest is subject to charging order, not direct seizure. |
| Private Retirement Plans (Including IRAs, Keoghs) | Fully exempt | CCP § 704.115 | Covers self-employed retirement plans, IRAs, etc. |
| Public Retirement Benefits | Fully exempt | CCP § 704.110 | Includes county employees, firefighters, peace officers, etc. |
| Aid to Blind, Aged, Disabled, AFDC | Fully exempt | CCP § 704.170 | |
| Financial Aid to Students | Fully exempt | CCP § 704.190 | |
| Relocation Benefits | Fully exempt | CCP § 704.180 | |
| Unemployment Benefits | Fully exempt | CCP § 704.120 | |
| Union Benefits (Labor Dispute) | Fully exempt | CCP § 704.120(b)(5) | |
| Workers' Compensation | Fully exempt | CCP § 704.160 | |
| Tools of Trade | Up to $5,000 total; $10,000 if used by both spouses | CCP § 704.060 | Vehicle can be claimed here if not using the standard motor vehicle exemption. |
| Wages | Minimum 75% of wages | CCP § 704.070 | Some exceptions apply for support orders. |
| Public Employees Vacation Credits | At least 75% if received in installments | CCP § 704.113 |
Often chosen by renters or those with less home equity, **System 2** includes a **wildcard** that can protect various assets. The spouse’s usage can’t double certain exemptions. References below cite CCP § 703.140(b).
| Asset | Description / Amount | Code Section | Notes |
|---|---|---|---|
| Homestead or Burial Plot | Up to $17,425 | § 703.140(b)(1) | Unused portion can be applied to any property (wildcard). |
| Animals, Appliances, Furnishings | Up to $450 per item | § 703.140(b)(3) | |
| Health Aids | Fully exempt | § 703.140(b)(9) | |
| Jewelry | Up to $1,150 | § 703.140(b)(4) | |
| Motor Vehicle | Up to $2,775 equity | § 703.140(b)(2) | |
| Personal Injury Recoveries | Up to $17,425 | § 703.140(b)(11)(D, E) | Not for pain and suffering / pecuniary loss. |
| Wrongful Death Recoveries | Needed for support | § 703.140(b)(11)(B) | |
| Disability Benefits | Fully exempt | § 703.140(b)(10)(C) | |
| Life Insurance Proceeds (Needed for Support) | Fully exempt | § 703.140(b)(11)(C) | |
| Unmatured Life Insurance (Accrued Avails) | Up to $9,300 | § 703.140(b)(8) | |
| Unmatured Life Insurance Policy | Fully exempt | § 703.140(b)(7) | Except for credit life insurance. |
| Alimony, Child Support | To the extent needed for support | § 703.140(b)(10)(D) | |
| ERISA-Qualified Retirement Benefits | Exempt to extent needed for support | § 703.140(b)(10)(E) | |
| Crime Victims’ Compensation | Fully exempt | § 703.140(b)(11)(A) | |
| Public Assistance, Social Security, Unemployment, Veterans | Fully exempt | § 703.140(b)(10)(A)(B) | Covers multiple government benefits. |
| Implements, Books, Tools of Trade | Up to $1,750 | § 703.140(b)(6) | |
| Wages | No specific wage exemption | -- | Federal wage garnishment limits may apply. |
| Wild Card | $925 + any unused portion of homestead/burial ($17,425) | § 703.140(b)(5) | Potentially up to $18,350 to protect any property (if minimal homestead used). |
Under System 2, note that married couples generally cannot double these exemptions (per case law: In re Talmadge, In re Baldwin). Carefully assess each spouse’s claims if filing jointly.
- California Code of Civil Procedure: CCP §§ 703.140 & 704 et seq.
- Additional references from: CaliforniaBankruptcy.info
- Title 11 of the U.S. Code (Bankruptcy Code): Federal Bankruptcy Laws
Disclaimer: This resource provides a comprehensive overview of California’s two exemption systems. It does not substitute for legal advice. Always consult a qualified California bankruptcy attorney to confirm updated amounts and applicability to your case.