Do I Qualify for Exemptions? A Practical Worksheet for California Bankruptcy Filers

Quick overview: Why this worksheet matters

If you’re considering Chapter 7 or Chapter 13 in California, a core early question is: which assets can you keep? California law offers two exemption systems (commonly called the “704” or homestead system and the “703” or wildcard/system‑2 set), and the choice you make on your bankruptcy schedules determines how much equity is protected. Choosing the best system requires a short inventory of assets, a simple equity calculation for your home and vehicles, and a check of your household income against the federal Means Test. For California filers, the homestead rule in CCP §704.730 was amended recently and now ties homestead protection to county median home prices (with statutory caps and annual inflation adjustments).

This article gives a concise, printable worksheet you can use right away, explains where to find the official exemption amounts (Judicial Council form EJ‑156), and shows how the federal Means Test interacts with your decision. Use the worksheet to gather numbers before you talk to an attorney or prepare schedules for filing.

Step‑by‑step worksheet and instructions (fill these values)

1. Basic info: Petition date (today’s date); household size; county where your primary residence sits; how long you’ve lived in California (see residency rule below).
2. Assets to list (current fair market value): primary residence (market value), mortgage(s) and liens (total outstanding principal), vehicles (value and loan balance), bank accounts, retirement accounts, household goods (estimated), jewelry/collectibles, tools of trade, and any other nonexempt assets.
3. Calculate equity: For real property: equity = market value − total liens. For vehicles: equity = NADA or private sale value − loan balance.
4. System 1 (CCP §704) homestead test: Under System 1 the homestead exemption equals the greater of (a) the countywide median sale price for a single‑family home in the calendar year prior to the year you claim the exemption (subject to the statutory cap) or (b) the statutory floor; these amounts are adjusted annually. Check CCP §704.730 and the Judicial Council EJ‑156 for current numeric limits for your county and filing year.
5. System 2 (CCP §703.140) wildcard & category exemptions: System 2 provides specific dollar amounts for categories (motor vehicle, household goods, jewelry, tools of trade) plus a wildcard that can be applied to any asset. The Judicial Council form EJ‑156 lists the current dollar amounts (updated periodically). Compare the total protected under System 2 against the protection you’d get under System 1.

Worksheet example (fill with your numbers)

After you fill the table, add the protected columns to see which system protects the greater portion of your estate. Note: you must pick one system on your schedules and you cannot mix System 1 and System 2 items. If you live in California but moved within the last two years, the applicable state exemption law may be determined by your domicile history (see the 730‑day federal rule explained below).

Means Test snapshot and quick check

The Means Test determines whether a Chapter 7 filer is presumed to have enough disposable income to repay creditors (which can push a filer into Chapter 13). The test begins with your average monthly household income (generally the average over the 6 months before filing) compared to the median family income for a household of your size in California. If your income is below the median for your household size, you typically pass the Means Test’s initial threshold. If it’s above the median, additional expense calculations are applied. The official median income tables and instructions published by the U.S. Trustee are the authoritative source for the test.

Practical quick check (do this before completing Form 122A‑1):

• Find the U.S. Trustee median income for California at the link on the Means Testing page (enter your household size).
• Compare your 6‑month average monthly income to the table value. If below, you likely qualify for Chapter 7 under the initial Means Test screen; if above, prepare the complete Form 122A‑2 (which applies standardized IRS allowances and local multipliers).
• Remember: the Means Test outcome does not affect your right to claim state exemptions — but the amount you must pay unsecured creditors in a Chapter 13 plan can be influenced by your non‑exempt equity and disposable income.

Residency and which state’s exemptions apply

Federal law restricts use of state exemptions to the state in which the debtor has been domiciled for the 730 days (two years) before filing. If you have not been domiciled in one state for that entire period, the law looks back to where you were domiciled for the majority of the 180 days preceding the 730‑day window. If you moved to California recently, this rule can change whether California exemptions apply. See 11 U.S.C. § 522(b)(3)(A) and related guidance.

Next steps & practical tips

• Always fetch the most recent Judicial Council EJ‑156 amounts for the filing year and your county before finalizing numbers.
• If you have substantial home equity, System 1 (704 homestead) often protects more; if you’re a renter or have many items of personal property, System 2 (703) may be better — but run the worksheet to be sure.
• Complex assets (business equipment, crypto, significant non‑exempt retirement, personal injury awards) require specialized review — consult a bankruptcy attorney for unusual items.

Bottom line: Complete the worksheet, check the Judicial Council EJ‑156 numbers and the U.S. Trustee median income table, then compare total protected values under the two systems. That comparison tells you, in practical dollars, which system likely leaves you with the most protected property and how the Means Test may affect chapter choice.