On January 1, 2021, California's homestead exemption grew from a prior low of $75,000 to a minimum of $300,000, to as much as $600,000, depending on county wide home prices. A big part of the change is that the increased homestead is available to homeowners regardless of age, health, or marital status. But with the increase comes a couple of complexities not usually part of our bankruptcy homestead drill. One is a Bankruptcy Code limitation on homesteads. The other is the question of the rights of creditors with a judgment lien predating the homestead increase. Bankruptcy Code limitations on homestead Section 522(p) of the Bankruptcy Code limits claims of homestead under state or local law to $170,350 if the property was acquired during the 1215 days prior to the bankruptcy filing. This limitation came in with the debtor-skeptic provisions of the bankruptcy "reform" amendments of 2005. It is an attempt to limit debtors from moving their wealth to states with … [Continue reading...]
