HOW DO BANKRUPTCY EXEMPTIONS WORK?

In many countries, when a person files for bankruptcy because of too much debt, he loses everything he owns to creditors. Not here in the good old USA! Here Chapter 7 bankruptcy is also called the fresh start. You keep most, if not all the things you own, including your house, your cars, your retirement accounts while at the same time, the court wipes out all your debts, thus giving you fresh start in life with no debt but with everything you own still intact. You still own your house and live in it, you still own and drive your cars, you still have your $1.0M retirement account.

To keep an asset while you petition the court for a discharge of debt, in a Chapter 7 you must be able to “exempt” it, using 704 or 703 of the California Code of Civil Procedure.

If you own a home with substantial equity, 704 would be more beneficial for you. 704 allows you to exempt as much as $722,000 of home equity! That’s a big deal by any standard. Before the law was amended about 4 years ago, the most home equity you could exempt was $100,000 under certain circumstances. This small amount of equity of course makes no sense anymore with homes in LA averaging about $950,000 right now, just under a cool million, one hundred thousand of home equity exemption under the old law just makes no sense. So, for once, our politicians did the right thing and increased the home equity exemption to $600,000 during Covid, if I remember correctly about 2021.

How does this work? So, let’s say you own a home in Los Angeles currently worth $1.2M and the balance of your only mortgage is $500,000. That means, the home equity you have is $700,000 which is still within the exemption of $722,000. You owe $100,000 of credit card debt which you used to operate a business that failed. You also owe the SBA $160,000 business loan. Together you owe a total of $260,000. You can’t pay the $260,000 so you decide to get Chapter 7 bankruptcy relief for a fresh start with no $260,000 debt but still get

to keep your house. Is this possible to do. Yes, of course, it is possible because your home equity of $700,000 is below the $722,000 threshold. However, be warned that $700,000 is close to $722,000. A trustee might say that his super realtor can sell your house for $1.3 M, in which case, there would be an excess of $100,000 home equity that is not exempt. You’re on dangerous ground here. Don’t try to file your Chapter 7 yourself because you might end up losing your house!

The 703-homestead exemption is only about $30,000. See the big difference? So, if you own a home, you must use 704 not 703. But if you don’t own a home, 703 might work for you with about $30,000 you can use to exempt on just about anything. Let’s say you bought some bitcoin that’s now worth $20,000; you can use 703 to exempt the bitcoin. I’m saying only a fraction of bitcoin because one bitcoin is now worth about $111,000.

Let’s say you have a Land Cruiser 2024 model that you still owe $50,000 on

and you want to keep it. You can use the car exemption of 704 to exempt about $8,000 of equity in the SUV. So, if the cruiser is worth $58,000 right now, and you owe $50,000 on it, the $8,000 of equity is exempt under 704 which means you can keep the SUV. Just continue the payments.

Let’s say you have $500,000 in your 401K, can you exempt it. Yes, no problem. You keep your $500,000 401K even as you ask the court to wipe out your $260,000 debt!

The foregoing are just examples and no meant as legal advice. But you see the picture. You can keep your home, your car/s, your retirement accounts. So, you get a fresh start in life because you keep everything you own but have no more $260,000 debt. It’s a great law! You literally start fresh again with no debt. This is good for you and your family because you can start saving money again.

 That’s why I get surprised when some clients hesitate, afraid to affect their credit score. The credit score goes up every year after bankruptcy but stays on your record for ten years. But in the third year after filing if you pay your new debts timely, you can easily get back to 700 fast.

If you need debt relief, please contact my office and I will analyze your case personally.

Disclaimer: None of the foregoing is considered legal advice for anyone. There is absolutely no attorney client relationship established by reading this article.

PPRAYING ALWAYS HELPS

It also helps to pray to our God, His Beloved Son, Jesus Christ, and the Blessed Mother Mary for divine protection against financial problems, because we have a God who loves us and His Beloved Son, Jesus Christ, showers us with infinite mercy.  All we must do is humble ourselves and pray to the Sacred Heart of Jesus for a drop from His ocean of infinite mercy.  Jesus revealed in 1930’s to Saint Maria Faustina Kowalska of Poland that all sinners which we all are and those who do not believe in God and those who do not yet know Jesus, should all be brought to His Sacred Heart and be submerged in the ocean of His infinite mercy, for the sake of His Sorrowful Passion.  Anything you ask for, when you pray the chaplet for His divine mercy will be granted, if compatible with His will.  Moreover, you are guaranteed a peaceful death.

What is the current proof that God and Jesus are divine and all powerful?  I refer to Exhibit A, the incorruptible body of Carlo Acutis!

Exhibit A

CURRENT ONGOING PHYSICAL PROOF GOD IS ALMIGHTY

INCORRUPTIBLE BODY OF CARLO ACUTIS DIED 2007 AT AGE OF 15

Look at the incorruptible body of the blessed Carlo Acutis who died at 15 in 2007. You can look at his body in Rome, Italy, now 14 years after his death. He looks like he’s just asleep in his jogging suit and rubber shoes!  That is a perfect example of an ongoing sign on earth that the God of Moses, our God, my God, is almighty and all-powerful that He even suspends the natural laws of biology and physics without any effort. He resurrected His one and only beloved son from death on the cross. Indeed, He has power over death.

I have thought, “What would the other religions believe if they saw the incorruptible body of the blessed Carlo Acutis? I think even Buddha, if he were alive today, would believe that Yahweh is the one True God.” No need to think about reincarnation and nirvana because his incorruptible body is available for all to see in Rome, Italy. We will not need any kind of explanation on the efficacy of modern-day mummification. Come on, man, which is all bull. The truth is in plain sight. Believe your own eyes that the one true God is all-powerful, and His name is Yahweh, “I am who Am.” He is the alpha and the omega, the beginning, and the end.

Exhibit B

MORE ONGOING PHYSCIAL PROOF GOD IS ALIMGIHTY

ADDITIONAL ONGOING PHYSICAL PROOF GOD IS ALIMIGHTY: INCORRUPTIBLE BODY OF ST. BERNADETTE IN NEVERS, FRANCE WHO DIED  146 YEARS AGO BUT HER BODY STILL REMAINS FRESH TO THIS DAY. I SAW HER INCORRUPTIBLE BODY 50 YEARS AGO. AND INCORRUPTIBLE BODY OF ST. CATHERINE LABOURE IN PARIS, FRANCE. WHO DIED 150 YEARS AGO AND HER BODY STILL REMAINS FRESH TO THIS DAY! I’VE BEEN TO PARIS 3X IN THE PAST 40 YEARS BUT HAVE NOT SEEN HER INCORRUPTIBLE BODY BECAUSE I ONLY FOUND OUT ABOUT HER INCORRUPTIBLE BODY LAST MONTH, JULY 2025. OUR BLESSED MOTHER MARY, MOTHER OF THE ONE TRUE GOD, TASKED HER WITH THE DESIGN AND DISCLOSURE OF THE MIRACULOUS MEDAL OF MARY TO THE WHOLE WORLD. MANY PHYSICAL AND SPIRITUAL HEALINGS SINCE THEN HAVE BEEN ATTRIBUTED TO THE MIRACULOUS MEDAL OF MARY WORN AROUND THE NECK.

“ETERNAL FATHER, WE OFFER YOU THE BODY, BLOOD, SOUL AND DIVINITY OF YOUR DEARLY BELOVED SON, JESUS CHRIST, OUR LORD AND SAVIOR, IN ATONEMENT FOR OUR SINS AND THOSE OF THE WHOLE WORLD, FOR THE SAKE OF HIS MOST SORROWFUL PASSION, PLEASE HAVE MERCY ON AMERICA AND THE WHOLE WORLD.”

Lawrence Bautista Yang is a graduate of Georgetown University Law Center and has been in Law practice for forty years. He specializes in Bankruptcy, Business and Civil Litigation and has handled more than five thousand successful Bankruptcy cases in California.  He speaks Mandarin and Fujian and looks forward to discussing your case with you personally.  Please call (626) 284-1142 for an appointment at 20274 Carrey Road, Walnut, CA 91789 or 1000 S Fremont Ave., Mailstop 58, Building A-10 South Suite 10042, Alhambra, CA 91803.