See, people get into all sorts of trouble when they go into Chapter 7 bankruptcy. There are times when clients are blindsided by the results of their case. Not my clients, of course, because of how thorough we are. But many people who go with other firms find themselves ill-prepared for what will happen during their bankruptcy case. One of the leading causes of this blindsided occurrences happen when people are forced to use 704 exemptions here in San Jose, California.
You have to choose an exemption scheme to protect as much equity in your assets as possible. Most people in California will be choosing between the exemption scheme under section 703 of the California Code of Civil Procedure and section 704. Truthfully, I would say there may be a preference to filing under section 703 in most cases. There is an exemption worth more than $25,000 that can be used to cover any type of property.
This can be incredibly useful for protecting various assets, including money in your checking account or that tax refund you are anticipating next month. This is critical. Too many people suffer in their Chapter 7 unnecessarily because their attorney did not take the time to plan accordingly. Sometimes people will need to protect equity in their home. Other times, people will be married, but filing alone and cannot get the cooperation of their spouse. In both of these situations, it is possible you will have to use the 704 exemption scheme here in the Bay Area.
This can make it incredibly difficult to protect money in your checking account. If the money in your checking account is from your recent pay stubs, then you can protect 75% of those funds heading into a Chapter 7 Bankruptcy. If the funds are from social security or other government assistance, you can probably protect that as well. Some people, however, will have maybe $7,500 in the checking account from refinancing your home, then it is entirely possible that this money may not be protected and you will be forced to surrender it to the Trustee.
Plan ahead with a good lawyer, please.