California Increases the Scope of Home and Car Protections beginning January 1, 2023



In January 2021, the homestead exemptions available to protect the equity in a primary residence were increased to up to as much as $600,000 from a typical exemption of $100,000 in the majority of cases. That homestead exemption has been adjusted upwards every year in an effort to keep up with inflation.


Starting January 1, 2023, a new enhancement to the homestead exemption will be applied in the context of a bankruptcy proceeding. Under the new law, created by California Senate Bill 1099, any appreciation in the value of debtor's primary residence would be also be exempt, provided that the equity in the home was fully exempt on the day a bankruptcy petition is filed. This avoids a potential loss of a primary residence if property values appreciate while the bankruptcy case is pending. This also prevents a bankruptcy trustee from capitalizing on administrative delays in the case by pursuing equity in a primary residence that did not exist when the case was filed.


The new law also increases the exemption people can claim for the unencumbered value of their vehicles. Under the old law, depending on the set of exemptions claimed, you were limited to $3,325 or $5,850 for the value of a vehicle. The new law increases the vehicle exemption to $7,500 under both sets of exemptions. The law also declares that any term in a vehicle finance agreement that classifies a borrower's filing of a bankruptcy as a default of the loan is void and unenforceable.


Click on the link below to the Legislative Counsel's Digest as well as further information concerning the amendments.

https://legiscan.com/CA/text/SB1099/id/2609341