Filing Chapter 7 Bankruptcy in California (2026)
Reviewed by DocDraft Legal Team · California · Last updated August 18, 2026
Chapter 7 bankruptcy is federal law, but the property you keep is set by California. California is an opt-out state: you must use California's exemptions and cannot choose the federal 522(d) list. California is unusual in offering two alternative state systems, the CCP 704 set and the CCP 703.140 bankruptcy set, and you pick one in full. This page explains California's homestead exemption under Code of Civil Procedure section 704.730, the vehicle and wildcard figures, the means-test median income, and the four federal bankruptcy courts where Californians file. Chapter 7 discharges most unsecured debt but not most student loans, recent taxes, or child and spousal support.
Does California use state or federal bankruptcy exemptions?
California is an opt-out state. Under Code of Civil Procedure section 703.140 you must use California exemptions and cannot elect the federal 522(d) list. California is unusual because it offers two alternative state systems: the CCP 704 set and the CCP 703.140 bankruptcy set. You choose one system in full; you cannot combine them.
Can I keep my house if I file Chapter 7 in California?
Often yes. Under Code of Civil Procedure section 704.730, California's homestead exemption is the greater of your county's prior-year median home sale price, capped at $600,000, or $300,000, adjusted yearly for inflation. If your home equity fits within that amount, Chapter 7 generally lets you keep the house.
Can I keep my car if I file Chapter 7 in California?
Usually yes if your equity is modest. California exempts $7,500 of motor vehicle equity under Code of Civil Procedure section 704.010, and the same $7,500 applies to one vehicle under the alternative 703.140(b)(2) system. If your car equity is at or below that figure, the vehicle is protected. Higher equity may be partly reachable.
What is the income limit to file Chapter 7 in California?
For cases filed on or after July 15, 2026, the U.S. Trustee median income figures for California are $79,253 for one earner, $102,797 for two, $116,541 for three, and $139,071 for four, adding $11,100 per additional person. At or below your household figure, you pass the first part of the means test.
California's Opt-Out Rule, Two Exemption Systems, and the CCP 704.730 Homestead
California is a bankruptcy opt-out state. Under Code of Civil Procedure section 703.140, a debtor filing in California must use California exemptions and cannot choose the federal 11 U.S.C. 522(d) set. What makes California distinctive is that it provides two alternative state systems and lets the debtor elect one: System 1 (the CCP 704 exemptions used outside bankruptcy) or System 2 (the CCP 703.140(b) bankruptcy-only set). You pick one system in its entirety and cannot mix them. System 1 carries California's large homestead exemption under CCP 704.730, equal to the greater of your county's prior-year median single-family home sale price capped at $600,000 or $300,000, adjusted annually for inflation. System 2 has a smaller $29,275 homestead but a portable wildcard under CCP 703.140(b)(5) of $1,750 plus any unused homestead amount, which many renters and low-equity filers prefer. Both systems exempt $7,500 of vehicle equity (CCP 704.010 or 703.140(b)(2)). Californians file in one of four federal bankruptcy courts: the Northern, Eastern, Central, or Southern District of California, based on where they have lived for most of the prior 180 days.
Relevant Laws
California Homestead Exemption (CCP 704.730)
Sets the System 1 homestead exemption at the greater of the county's prior-year median single-family home sale price, capped at $600,000, or $300,000, adjusted annually for inflation. This is the exemption that lets many California homeowners keep their house in Chapter 7.
California Exemption Election and Opt-Out (CCP 703.140)
The statute governing California's opt-out from the federal exemptions. It lets a bankruptcy debtor elect either the subdivision (b) bankruptcy set (System 2) or the other California exemptions (System 1), but not both, and bars use of the federal 522(d) list.
California Motor Vehicle Exemption (CCP 704.010)
Exempts $7,500 of aggregate equity in motor vehicles under System 1. The alternative System 2 provision, CCP 703.140(b)(2), likewise exempts $7,500 in one vehicle, and 703.140(b)(5) adds the portable wildcard.
Federal Bankruptcy Code Exemptions and Means Test (11 U.S.C. 522, 707)
The federal law behind Chapter 7. Section 522(b)(2) lets a state opt out of the federal 522(d) exemptions, which California has done, and section 707(b) sets the means test measured against state median income.
Regional Variances
California Chapter 7 Exemption Table
Homestead
System 1 (CCP 704.730): the greater of your county's prior-year median single-family home sale price, capped at $600,000, or $300,000, adjusted annually for inflation. System 2 (CCP 703.140(b)(1)): $29,275. You use one system, not both.
Motor vehicle
System 1 (CCP 704.010): $7,500 of aggregate equity in motor vehicles. System 2 (CCP 703.140(b)(2)): $7,500 in one motor vehicle. Equity above the figure may be reachable by the trustee.
Wildcard
Only System 2 has one. CCP 703.140(b)(5): $1,750 in any property plus any unused portion of the $29,275 homestead. This portable amount is the main reason renters and low-equity filers choose System 2 over System 1.
Personal property
System 2 (CCP 703.140) exempts household goods, furnishings, apparel, and appliances, plus up to $7,500 in vacation credits or accrued unused vacation, sick, family leave, or wages under 703.140(b)(10). System 1 protects ordinary and necessary household furnishings and personal effects under CCP 704.020.
Wages
Paid earnings are exempt under CCP 704.070 to the extent they would not be subject to a garnishment levy under CCP 706.050, which caps garnishment at the lesser of 25 percent of weekly disposable earnings or the amount above 40 times the applicable minimum wage. Earnings already withheld for support are fully exempt when paid.
Retirement
Under CCP 704.115, private retirement plans, including union and profit-sharing plans, are fully exempt. IRAs and self-employed plans are exempt only to the extent necessary to support the debtor and dependents at retirement. ERISA-qualified plans are separately excluded from the bankruptcy estate under federal law.
Suggested Compliance Checklist
Confirm the current California means-test median income
Before you file days after startingCheck your household size against the U.S. Trustee California median income figures in effect on your filing date, since these update periodically. For cases filed on or after July 15, 2026 the figures are $79,253 for one, $102,797 for two, $116,541 for three, and $139,071 for four, adding $11,100 per additional person.
Complete the pre-filing credit counseling course
Within 180 days before filing days after startingTake an approved credit counseling course from a provider authorized for your California district and keep the certificate. You must file it with your petition. Skipping this can get your case dismissed before your debts are addressed.
Choose your California exemption system and value your assets
Before preparing your schedules days after startingDecide between System 1 (CCP 704, with the large 704.730 homestead) and System 2 (CCP 703.140, with the portable wildcard). Value your home, vehicle, and personal property so you can match assets to exemptions. You must choose one system in full.
Prepare and file your petition and schedules
Filing day days after startingFile your petition, schedules, and exemption claims in the correct court: the Northern, Eastern, Central, or Southern District of California, based on where you have lived for most of the prior 180 days. Filing triggers the automatic stay that pauses collection and garnishment.
Attend the 341 meeting and finish the debtor education course
Before discharge days after startingAttend the 341 meeting of creditors and answer the trustee's questions under oath, then complete the required post-filing financial management course and file the certificate. Both are required before the court will grant your discharge. An attorney can help with contested exemptions.
| Task | Description | Document | Days after starting |
|---|---|---|---|
| Confirm the current California means-test median income | Check your household size against the U.S. Trustee California median income figures in effect on your filing date, since these update periodically. For cases filed on or after July 15, 2026 the figures are $79,253 for one, $102,797 for two, $116,541 for three, and $139,071 for four, adding $11,100 per additional person. | - | Before you file |
| Complete the pre-filing credit counseling course | Take an approved credit counseling course from a provider authorized for your California district and keep the certificate. You must file it with your petition. Skipping this can get your case dismissed before your debts are addressed. | - | Within 180 days before filing |
| Choose your California exemption system and value your assets | Decide between System 1 (CCP 704, with the large 704.730 homestead) and System 2 (CCP 703.140, with the portable wildcard). Value your home, vehicle, and personal property so you can match assets to exemptions. You must choose one system in full. | - | Before preparing your schedules |
| Prepare and file your petition and schedules | File your petition, schedules, and exemption claims in the correct court: the Northern, Eastern, Central, or Southern District of California, based on where you have lived for most of the prior 180 days. Filing triggers the automatic stay that pauses collection and garnishment. | - | Filing day |
| Attend the 341 meeting and finish the debtor education course | Attend the 341 meeting of creditors and answer the trustee's questions under oath, then complete the required post-filing financial management course and file the certificate. Both are required before the court will grant your discharge. An attorney can help with contested exemptions. | - | Before discharge |
Frequently Asked Questions
Yes. Under Code of Civil Procedure section 703.140, a debtor filing bankruptcy in California must use California exemptions and cannot elect the federal 11 U.S.C. 522(d) set. California is unusual in offering two alternative state systems, CCP 704 and CCP 703.140(b), and you must choose one of them in full rather than combining them.
Under Code of Civil Procedure section 704.730, the System 1 homestead exemption is the greater of your county's prior-year median single-family home sale price, capped at $600,000, or $300,000, both adjusted annually for inflation. The alternative System 2 homestead under CCP 703.140(b)(1) is $29,275. You use one system, not both.
Only System 2 has a true wildcard. Under Code of Civil Procedure section 703.140(b)(5), you may exempt $1,750 in any property plus any unused portion of the $29,275 homestead. A renter who applies none of the homestead to a house can protect a substantial amount of cash or other assets, which is why many filers choose System 2.
No. Chapter 7 discharges most unsecured debt like credit cards and medical bills, but it does not erase most student loans, recent income taxes, child support, or spousal support, and it will not discharge debts from fraud. Secured debts like a car loan remain unless you surrender the collateral or reaffirm the loan.
You file in the federal bankruptcy court for your area: the U.S. Bankruptcy Court for the Northern, Eastern, Central, or Southern District of California. The Central District, covering Los Angeles and surrounding counties, is the busiest bankruptcy court in the nation. You file where you have lived for most of the prior 180 days.
Other California guides
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