A California bankruptcy exemptions chart compares the two systems the state lets filers choose between: System 1 under Code of Civil Procedure Section 704, which pours most of its protection into home equity, and System 2 under Section 703.140, which trades a small residence exemption for a flexible wildcard that can shield cash, investments, or anything else you own. California has opted out of the federal exemptions entirely, so every filer in the state uses one of these two sets. You cannot mix categories between them, both spouses in a joint filing must pick the same system, and the choice you make on your petition is final for that case.1California Legislative Information. California Code of Civil Procedure 703.140
Side-by-Side Exemption Chart
The figures below reflect currently enacted statutory amounts. Dollar caps in both systems adjust periodically for inflation.
| Asset Category | System 1 (CCP 704) | System 2 (CCP 703.140) |
|---|---|---|
| Primary residence (homestead) | County median single-family sale price or statutory floor, whichever is greater; 2026 max approximately $743,681 | $29,275 |
| Wildcard (any property) | None | $1,550 plus any unused residence exemption, up to $30,825 total |
| Motor vehicles | $7,500 combined equity | $7,500 combined equity |
| Household goods, furniture, clothing | No fixed cap; must be ordinary and reasonably necessary | $725 per item |
| Jewelry, heirlooms, and art | $8,725 total | $1,750 (jewelry only, personal or family use) |
| Tools of the trade | $8,725, including one commercial vehicle | $8,725 |
| Life insurance cash value | $13,975 per spouse (combinable) | Not separately listed |
| Personal injury recovery | Protected to the extent necessary for support | $29,275 |
| Health aids (prosthetics, wheelchairs) | Fully exempt, no cap | Not separately listed |
| Social Security, unemployment, disability, veterans’ benefits | Protected, with limits on bank deposits | Fully exempt, no cap |
Which System Protects More of Your Property
The right answer depends almost entirely on home equity. If you own a home with meaningful equity, System 1 wins and usually wins by a wide margin, because System 2’s $29,275 residence cap is a fraction of what Section 704 provides. If you rent, or you bought recently and have little equity, System 2 is almost always stronger because its wildcard turns into protection for whatever asset actually matters in your case: a tax refund, a savings balance, stock, a settlement check that hasn’t arrived yet.
The harder cases are filers who own a home but also hold significant personal property or liquid cash. Neither system is perfect for that mix. System 1 saves the house but leaves cash exposed, while System 2 shields the cash but puts the house at risk. Running the numbers against each system for your specific assets is the only reliable way to decide.
System 1 in Detail (CCP Section 704)
The System 1 homestead is the main event. It protects the greater of your county’s median single-family home sale price from the prior calendar year, or a statutory floor, with both figures adjusting annually for inflation based on California’s Consumer Price Index. In 2026 the adjusted maximum reaches approximately $743,681, depending on the county’s median.2California Legislative Information. California Code of Civil Procedure 704.730 Counties below the statutory floor still get the floor amount.
Beyond the home, System 1 covers the categories most filers care about: $7,500 in motor vehicle equity, $8,725 in jewelry, heirlooms, and art, $8,725 in tools of the trade (including one commercial vehicle), $13,975 per spouse in life insurance cash value, and no fixed cap on ordinary household goods or on medically prescribed health aids.3California Legislative Information. California Code of Civil Procedure 704 – Article 3 What System 1 does not offer is a wildcard. Cash in a bank account on the filing date has no general shelter under this system beyond the limited wage protections of CCP 704.070.
System 2 in Detail (CCP Section 703.140)
System 2 drops the homestead to $29,275 and adds a wildcard of $1,550 in any property you choose, plus any unused portion of the residence exemption. For a filer who owns no home at all, that stacking produces a wildcard of up to $30,825 applicable to anything: a checking account, brokerage shares, an expected tax refund, cryptocurrency, a boat.1California Legislative Information. California Code of Civil Procedure 703.140
The named categories under System 2 include $7,500 in motor vehicle equity (matching System 1), $725 per item for household goods, $1,750 in jewelry held for personal or family use, $8,725 in tools of the trade, and $29,275 for personal injury recoveries on account of bodily injury to you, your spouse, or a dependent. Social Security, unemployment, veterans’, and disability payments are fully exempt under this system with no dollar limit.1California Legislative Information. California Code of Civil Procedure 703.140
Retirement Accounts Under Both Systems
Retirement savings receive strong protection no matter which system you choose. Employer-sponsored plans that qualify under federal ERISA rules, including 401(k)s, 403(b)s, profit-sharing plans, and traditional pensions, are fully exempt with no dollar cap, because the protection comes from federal law. SEP-IRAs and SIMPLE IRAs funded entirely by employer contributions generally receive the same unlimited treatment.
Traditional and Roth IRAs you set up and fund yourself are capped. For bankruptcy cases filed between April 1, 2025, and March 31, 2028, the combined IRA exemption limit is $1,711,975 per person. One trap worth knowing: retirement benefits that are already being paid out as monthly income lose exempt status to the extent they exceed what the court considers reasonably necessary for your support.
Married Couples Cannot Double the Exemptions
California breaks from the federal rule here. Because the state has opted out of the federal exemptions, married couples filing jointly generally do not get two full sets of protection. Both spouses must use the same system, and in most categories they share one exemption amount rather than each claiming their own. The homestead is explicitly one per household, even when both spouses are on the deed, and the Ninth Circuit has upheld that reading repeatedly.
Life insurance is the clearest exception. CCP 704.100 grants each spouse a separate $13,975 exemption for policy cash value, and the two can be combined regardless of which spouse owns the policies.3California Legislative Information. California Code of Civil Procedure 704 – Article 3 Other narrow exceptions can apply, so couples with layered assets should confirm the specifics before filing.
You Must Have Lived in California for Two Years
Federal bankruptcy law decides which state’s exemptions you may claim, and the window is strict. To use California’s exemptions at all, you must have lived in the state for the full 730 days immediately before filing your petition.4Office of the Law Revision Counsel. 11 U.S. Code 522 – Exemptions
If you have not been in California for two years, the court looks back further and applies the exemption laws of whichever state you lived in for most of the 180 days before that two-year window. Someone who moved to California 18 months ago from Oregon would file here but use Oregon’s exemptions. If the domicile rules would leave you ineligible for any state’s exemptions, 11 U.S.C. § 522(d) lets you elect the federal bankruptcy exemptions as a fallback.
What Happens to Property Above the Limits
Any equity above your chosen system’s cap is non-exempt and available to the Chapter 7 trustee, who can sell the asset, pay you the exempt portion in cash, and distribute the rest to creditors.5United States Courts. Chapter 7 – Bankruptcy Basics A $15,000 paid-off car against a $7,500 vehicle exemption, for example, means the trustee can sell the car, return $7,500 to you, and pay $7,500 to creditors after costs.
In practice trustees routinely abandon property when the sale costs would eat up the recovery. Many Chapter 7 cases close with the filer keeping everything because the non-exempt margin is too thin to justify a liquidation. Where equity sits just above the line, some filers negotiate a cash buy-back with the trustee instead of surrendering the asset.