In the vast majority of cases, people are absolutely terror-stricken at the very mention of bankruptcy, mainly because they’re under the impression that they will lose all of their assets and possessions if they start down this road.
However, this is a common misconception. In California (and throughout the USA) there are legal safeguards in place, known as “exemptions”, that prevent this exact scenario from happening when a person applies for bankruptcy.
While these exemptions are typically limited to several very specific assets, most people are quite surprised and exhilarated when their Chapter 7 bankruptcy attorneys in San Diego give them the opportunity to protect even more of their possessions. Enter “wildcard exemptions”.
What is the wildcard exemption in Chapter 7 in California?
What happens when you apply for bankruptcy is you’re effectively leveraging your assets and belongings in order to repay existing debts. However, this course of action would be meaningless if you’re left with nothing afterward.
Exemptions exist to ensure you can have a fresh financial start by protecting your most essential assets, such as:
- Primary residence;
- Personal possessions;
- Motor vehicle;
- Public benefits;
- Tools of the trade;
- Retirement/pension accounts;
- Alimony/child support.
As you can see, these exemption categories (known as Set 1) are very specific. As such, they can be extremely limiting in certain situations. Therefore, the logical question here is: “What if there are some assets that need protection, but do not fall into any of these categories?” This is where Wildcard Exemption comes into play.
What is the Wildcard Exemption?
California’s Chapter 7 bankruptcy has a set of rules, that are more flexible than their aforementioned counterpart. These rules, known as Set 2 or, more commonly “Wildcard exemptions” serve to help you protect any valuable property that either:
- Exceeds the maximum amount of another exemption, or;
- Can’t be sorted into any of the other exemption categories.
What this means is that wildcards effectively allow you to safeguard assets you want to keep, even if those assets aren’t covered by any of the other, more specified exemptions. As such, they represent a unique “safety net”, enabling you to have even more financial breathing room once the bankruptcy process finishes.
What are the characteristics of wildcard exemption?
What are the characteristics of wildcard exemption?Wildcard exemption is super straightforward. Typically, it is limited by a certain amount of money which, currently, stands at the maximum of $31,950. However, it is important to note that this amount can be increased if no homestead exemption is claimed.
Which assets can be protected using the wildcard exemption?
Some assets you can potentially shield during the Chapter 7 process include (but are not limited to):
- Extra vehicles: Additional cars or motorcycles that exceed what’s allowed by vehicle exemptions;
- Cash savings: Some or all of the funds in your bank account that aren’t covered by other exemptions (pensions, insurance, retirement, etc.);
- Collectibles: Valuable art, rare coins, or other collection items that exceed the value of specific exemptions;
- Jewelry: High-value pieces that go beyond the value limits of jewelry exemption;
- Furniture/electronics: Furnishings, appliances, and electronic devices of total value exceeding what’s allowed by personal property exemptions;
- Additional tools: Equipment and accessories that you rely upon for your profession and livelihood, that aren’t covered by the tools of the trade exemption.
Who are the top Chapter 7 bankruptcy attorneys near me in San Diego?
Whether you’re intent on taking the standard or wildcard route, the Bankruptcy Law Offices of Mark L. Miller are here to help you exercise your legal rights. From helping you with the means test and determining your eligibility for wildcard exemptions to the final resolution of your case, we’re here to ensure you go through the process with the least amount of hassle and the greatest amount of reliability.
Our exemplary attorneys boast more than 25 years of experience in the industry, offering comprehensive legal assistance to individuals applying for Chapter 7 bankruptcy. Pay us a visit at our offices near Presidio Park or give us a call for a free consultation and let us aid you on your journey toward a fresh financial beginning!