Bankruptcy in California

Filing Bankruptcy in California

California requires filers to use state exemptions only. You cannot choose the federal exemption schedule. This means your homestead exemption is $300,000-$600,000 (varies by county median), which determines how much equity in your home is protected from creditors.

Homestead Exemption: $300,000-$600,000 (varies by county median)

The homestead exemption protects equity in your primary residence during bankruptcy. In California, you can protect up to $300,000-$600,000 (varies by county median) of equity in your primary residence. If your home equity exceeds this amount, a Chapter 7 trustee could force a sale — making Chapter 13 (which lets you keep your home while repaying over 3-5 years) a safer option for homeowners with significant equity.

After Discharge: Rebuilding Credit in California

Once your bankruptcy is discharged, the rebuild process is the same regardless of state. Open a secured credit card (the Discover it Secured is the best option with $0 fee and Cashback Match), keep utilization below 10%, and add a credit-builder loan within 6 months.

If you plan to form a business after bankruptcy, California's LLC filing fee is $70 through the Secretary of State at www.sos.ca.gov. You can begin building business credit immediately after discharge — bankruptcy only affects your personal credit file, not your new LLC's business credit profile.