Legal Question in Bankruptcy in California

If your creditors file a lawsuit against you, obtain a judgment, then attempt to sell your home (they could only sell your portion of the home), a Homestead Declaration will only protect your interest up to the exemption amount, whcih depends upon a number of factors, including, your age, your health and the number of dependents you have. If, for example, you have $80,000.00 in equity (after paying all other encumbrances and the costs of sale) and your exemption amount is $75,000.00, your judgment creditor would be able to sell the house, give you $75,000.00 and keep $5,000.00. Whether you would be able to keep the same house in a bankruptcy depends upon the amount of equity you have in the house because the exemption rules are different for bankruptcy. If you have little or no equity, you would likely be able to keep your house; on the other hand, if you have a large amount of equity, and you file a Chapter 7 liquidation, the Trustee may sell the house to pay your creditors. See California Code of Civil Procedure section 704.730.