During the course of an individual’s life, financial problems can develop that were unintended; these are just things that happen. In some instances, no other solution is feasible besides exploring bankruptcy relief in order to handle devastating debts and tormenting creditors. If you file for bankruptcy in California, you should be aware that there are specific and unique laws that apply in that particular state.

Federally sanctioned supplemental exemptions are permitted under the bankruptcy laws in California, along with the exemptions that are permitted in California State itself. Under California bankruptcy laws, a person must choose from two categories of exemptions. These categories are designated as System One and System Two. Deciding which of the two systems is the best fit, with support from an individual providing bankruptcy help, is up to the debtor.

According to the law in California, the System One option offers a homestead exemption of as much as $50,000 for a single person who is not disabled, as much as $75,000 for families, and as much as $125,000 for senior citizens. In addition, the following personal exemptions are permitted in System One: as much as $2,000 cash in the bank; as much as $2,000 worth of building materials; as much as $5,000 worth of jewelry and heirlooms; motor vehicles valued up to $1,900; burial plots; appliances; home furnishings; personal clothing; health related aids; food; and any money that comes from personal injury or wrongful death claims. Allowances are also made in System One for any kind of insurance claims; pensions; benefits, like unemployment compensation; workers’ compensation claims; health aid claims; tools of the trade, which includes tools, uniforms, equipment, books and manuals required to continue in a trade; and wages exempt at a minimum of 75%.

Under California bankruptcy laws, System One exemptions differ a great deal from System Two exemptions. For all homestead categories a maximum of $17,245 is allowed based on the System Two homestead exemption. The exemption is capped at $1,150 for jewelry and heirloom. Motor vehicles valued at less than $1,775 are exempt, while trade tools with a value of as much as $1,750 are exempt. The total amount of personal benefits permitted to be exempt under System Two is $17,425, although it provides for a wild card exemption of as much as $925. Wage exemption does not exist under System Two, with the only exemption allowed for ERISA-qualified pension benefits.

Due to the complexity of these two exemptions under the California bankruptcy laws, people are well advised to retain a lawyer who specializes in this area of the law for assistance with bankruptcy. The lawyer will evaluate your total financial situation and recommend which of the two systems would work best for your situation when you must file for bankruptcy in this state.