If you are age 55 or older, you may have a significant equity in your home.  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.  You would receive the exempted amount from the proceeds of the sale.  A chapter 13 bankruptcy might allow you to keep your home, but only if you can afford to make the mortgage payments and meet all other requirements.

Below is a summary of the 3 ways that an individual or couple may qualify for the $175,000 homestead exemption under C.C.P Section 704.730(a).

[If you are under 55 or not otherwise qualified as described below, see the Exemptions section.]

  • $175,000 homestead exemption if you or your spouse is age 65 or older

This exemption is available to a single homeowner age 65 or older, or a couple filing a joint petition, if either or both are age 65 or over.  You may not double the exemption amount if you are married and filing jointly.

  • $175,000 homestead exemption if you are physically or mentally disabled and not able to engage in substantial gainful employment

This exemption amount is available to anyone who has a physical or mental disability, and as a result cannot engage in substantial gainful employment.  If you are qualified for Social Security disability, you are presumed to be qualified for this exemption.  If you have not applied for or received Social Security disability or private disability insurance benefits, you may qualify for this exemption if one of your doctors provides a statement of the diagnosis and the opinion that you are unable to work.

  • $175,000 homestead exemption if you are age 55 or over, and your gross annual income is $15,000 or less, or you are married and your combined income is $20,000 or less

“Gross annual income” is your gross income for the 12 months prior to filing the bankruptcy petition.  If you are self-employed and your income is from providing services, you may not deduct operating expenses from the gross income figure.

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