When you go through a Chapter 7 or Chapter 13 Bankruptcy, you can designate property as exempt from the claims of creditors. This is because the government wants you to be able to start over free from an unrecoverable debt. As of January 1, 2013, the dollar amount of assets protected by these “debtor exemptions” went up significantly, particularly the “homestead exception.” Moreover, every three years, starting April 1, 2013, the Judicial Council has to update the homestead exception for inflation.
Bottom line: A lot of people are going to get to keep a lot more of their assets in bankruptcy.
For the full details, check out the text of the law.
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