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RJS LAW: San Diego Tax Attorney | IRS | FTB | CPA | California

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    • Ronson J. Shamoun, ESQ., LL.M.
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  • Home
  • About
    • Ronson J. Shamoun, ESQ., LL.M.
    • Chandara Diep, ESQ., LL.M.
    • Devon J. Arabo, ESQ., LL.M.
    • Brian M. Malloy, Esq.
    • Andrea Cisneros Valdez, Esq., LL.M.
    • Sam Imandoust, ESQ., LL.M
    • Lauren Suarez, ESQ., LL.M.
    • John I. Forry, Esq.
    • Martin Schainbaum, ESQ., LL.M.
    • Kaveh Imandoust, JD, MBT, CPA
    • Joseph Cole, ESQ., LL.M.
    • Christopher Engelmann, ESQ., LL.M.
    • Remy Hogan, Esq., LL.M.
    • Steve S. Mattia, Esq.
    • Dod Ghassemkhani, ESQ.
    • Vincent Renda, Esq.
    • Pedro Bernal, Esq.
    • Sabri P. Shamoun 1938-2023
    • Melanie M. Shamoun
    • Renae Arabo
    • Hilary Dargavell
    • Sandie Portilla
    • Lupita C. Torres
    • Jewell Cornejo
    • Kesia Belford
    • Danielle N. Misleh
    • Judith G. Jeremie, JD
    • Rebecca Shuman
    • Michael Lutzky, CPA
    • Gianna Iskander
  • Practices
    • Tax
      • IRS TAX MATTERS
        • IRS Appeals
          • IRS Appeals Process
          • Contesting an IRS Levy
          • Why Retain RJS LAW for IRS Appeals
          • 4 Tips For Navigating The IRS Rapid Appeals Process
        • IRS AUDITS
          • IRS Correspondence Audits
          • What are IRS Field Audits?
          • Initial IRS Compliance Center Audits
          • IRS Office Audits
          • What happens in an IRS Audit?
          • Taxpayer Rights Under IRS Publication 1
          • IRS Warns Taxpayers About Scam
        • NOTICES
          • IRS Notices
          • IRS Letters
          • FTB Notices
          • Avisos en Español
        • IRS Collections
          • Avoiding and Eliminating IRS Tax Liens
          • Collection Due Process Hearing
          • CP 501 – IRS Notice
          • Failure to file a tax return: What happens?
          • How the IRS calculates interest
          • How to get a tax levy released
          • ACS – Automated Collection System
          • IRS Collections Process
          • IRS Interest Abatement
          • IRS Revenue Officers
          • Jeopardy Assessments and Jeopardy Levies
          • National Tax Agencies
          • RJS LAW Approach to Collections
          • IRS Statute of Limitations on Collections
          • Streamlined Installment Agreements
          • Tax Penalty Abatement
          • Taxpayer Assistance Orders TAO
        • IRS Payroll Tax
          • Independent Contractor Reclassification Audits
          • IRS Forms 940 and 941
          • IRS Trust Fund Interviews
          • Payroll Tax Liability Payment Options
          • Trust Fund Recovery Penalties
        • IRS Wealth Squad
        • Offer in Compromise & Tax Settlements
          • OVERVIEW OF OFFER IN COMPROMISE PROCESS
          • The Offer in Compromise Process
          • Appealing an Offer in Compromise to the IRS
          • How does the IRS evaluate an Offer in Compromise
          • Offer in Compromise and Dissipated Assets
          • Offer in Compromise Requirements
          • Pros and Cons of an Offer in Compromise
          • Why Choose RJS LAW?
          • Offer in Compromise Alternatives
          • Actual IRS Offer in Compromise Results
      • STATE TAX MATTERS
        • EDD California Payroll Tax Lawyer
          • EDD Investigations
          • EDD Collections – Liens, Levies, and Garnishments
        • CDTFA – California Sales Tax
          • California Sales Tax Appeals
          • California Sales Tax Audits
          • California Department Of Tax And Fee Administration – CDTFA
        • California State Tax Matters – California Franchise Tax Board | FTB | EDD
          • California Residency Audits
          • Discharging State Income Taxes in Bankruptcy
          • State Tax Practice – Outside of California
      • CRIMINAL TAX ISSUES
        • Criminal Investigation Division
        • IRS Criminal Investigation Division Tactics
        • Criminal Tax Defense – Tax Crimes
        • Currency Transaction Records & Suspicious Activity Reports
        • IRS Methods of Proof: Tax Fraud and Evasion
        • Methods IRS Agents Use to Locate Assets
        • IRS Special Agent Visits
        • Are You a Criminal Investigation Target?
        • Criminal Tax Attorney vs. White Collar Defense
      • CORPORATE TAXES
      • TAX COURT LITIGATION
      • Innocent Spouse Relief
    • International Tax
    • Visa Gold Card
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    • Trust Litigation
    • Trust, Estate & Probate Litigation
    • Trust & Estate Administration
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      • Bankruptcy (FAQ’s)
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      • Landlord Tenant Law
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  • Tax Institute
    • 10th Annual USD School of Law – RJS LAW Tax Institute
    • 9th Annual USD School of Law – RJS LAW Tax Institute
    • 8th Annual USD School of Law – RJS LAW Tax Controversy Institute – July 28th, 2023
    • 7th Annual USD School of Law – RJS LAW Tax Controversy Institute – July 15th 2022
    • 6th Annual USD School of Law – RJS LAW Tax Controversy Institute
    • 5th Annual USD School of Law – RJS LAW Tax Controversy Institute
    • 4th Annual USD School of Law – RJS LAW Tax Controversy Institute
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    • RJS LAW Donates Billboard to the Girl Scouts
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Increased Bankruptcy Homestead Exemption Allows More Homeowners To Keep Homes

Bankruptcy Homestead Exemption

California Homestead Exemption

New Assembly Bill 1885 expands California’s homestead exemption enhancing the benefits of filing a chapter 7 and chapter 13 bankruptcy. This new legislation went into effect January 1, 2021.  The idea behind the new bankruptcy California homestead exemption law is to help limit liabilities while protecting homeowners from losing their homes in bankruptcy.

For many years prior to this expansion, only $75,000 was exempted for an unmarried individual, $100,000 for a married couple, and $175,000 for those 65 or older or disabled.  The newly expanded homestead exemption increased the exemption limit in California to $300,000 to $600,000 varying based on the county.  These limits, adjusted annually for inflation, have increased the 2023 bankruptcy homestead exemption to $678,391 in San Diego County for those who qualify.

A chapter 7 trustee can sell a debtor’s non-exempt property to pay creditors.  This means if a debtor’s home is worth more than the allowed exemption, the bankruptcy trustee can forcibly sell the debtor’s home. The debtor would be left only with a check for the amount of the exemption after the trustee receives the proceeds from the sale of their home.  After the debtor receives the exemption amount, any surplus would go to pay creditors, a percentage to the trustee, and any remainder to the debtor.

Under chapter 7 bankruptcy, the new homestead exemption amount allows more homeowners to file chapter 7 bankruptcy while protecting up to $678,391 of equity in their home.  This means more homeowners will be able to keep their higher-valued homes while discharging most types of debts.  Prior to 2021, many of these debtors would have been unable to protect the equity in their homes under chapter 7 leaving them a chapter 13 repayment plan as their only other bankruptcy option.

A chapter 13 bankruptcy allows a debtor to repay debts through a three-to-five-year plan while keeping non-exempt property.  Under Bankruptcy Code 11 U.S.C. § 1129(a)(7), known as the best interests of creditors test, a chapter 13 debtor’s plan must pay unsecured creditors no less than they would receive if the case were filed under chapter 7.  Since the homestead exemption limit increased to $678,391 in San Diego County, a chapter 13 debtor may be far less burdened by the requirement to pay unsecured creditors what they would have received under a theoretical chapter 7.

There are certain criteria for the homestead exemption. The property must be a debtor’s principal residence, and the debtor must have lived in California for at least the past two years preceding  the bankruptcy filing.  As with most things, certain exceptions may apply.  If you have questions or a considering a bankruptcy, please call the RJS LAW bankruptcy attorneys at 619-595-1655 of contact us via the web RJS LAW to schedule a free consultation to see if you qualify for the new increased homestead exemption amount.

Written by Judith Jeremie

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Filed Under: Bankruptcy, Bankruptcy Laws, Homestead Exemption Tagged With: bankruptcy, bankruptcy law, Homestead Exemption

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