California Creditor-Debtor Law Forum




Welcome to the California Creditor-Debtor Law Forum!

The purpose of this Forum is to provide a framework for the collection and discussion of creditor-debtor law in California, and to be a resource for collection professionals and debtor planners alike. The hope is that this Forum will develop with an objective view of the law, neither pro-creditor nor pro-debtor.

The descriptions of Divisions, Chapters, and Articles are those which are found in the statutes. However, the description of the statutes themselves has been added -- and may not always be correct or accurately descriptive. So, for instance, if CCP 697.350 is entitled "Lien On Real Property To Extent Of Judgment", that has been added by us, and was not found in the original legislation.

Please Add Materials Often. Again, this Forum is meant to provide a "framework" which invites additions of relevant information -- statutory changes, legislative comments to statutes, court opinions that interpret particular statutes, or even just a plain-English interpretation or one's opinion of the statutes. The more that is added, the more useful the Forum will become.

However, please do not add any copyrighted materials, unless you are the author and owner of the copyright and agree to waive the copyright. Note that there is no copyright for original government works, i.e., statutes, court opinions, etc.

Registration. The Forum can be read by anybody, but new posts will be restricted to professionals or academics who are involved with creditor-debtor law, including attorneys, judgment collection professionals, law students and professors, and the like. The registrations and contributions of governmental personnel, such as judges, briefing clerks, filing clerks, sheriffs and deputies, receivers, trustees, and those who act as "levying officers" are quite welcome.

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California Exemptions

(Post-Judgment Creditor Protection)

California is perhaps the most creditor-friendly state. California has a sophisticated and pro-creditor set of laws for collecting debts, known as the "Enforcement of Judgments Law" ("EJL"), and an experienced and aggressive collections Bar. For instance, the Los Angeles County Remedies Section meets at least monthly to discuss ways to bust through debtors' schemes.

California law also allows for the assignment of judgments to non-lawyer professional collectors (known as "Judgment Enforcement Professionals") who aggressively collect debts with methods that are so aggressive that they regularly press the envelope of what is allowed by law. These non-lawyer collectors even have their own trade group, see

While California's spendthrift statute has withstood the test of time, California does not allow self-settled spendthrift trusts (i.e., trusts that you create for your own benefit), and so the "Asset Protection Trusts" sold by trust companies in Alaska, Delaware and Nevada, etc., are of highly questionable value (some might argue that the sale of such trusts to California persons borders on the fraudulent).

Otherwise, California follows most of the uniform acts, such as the Revised Uniform Limited Partnership Act ("RULPA"), the Revised Uniform Liability Company Act ("RULLCA"), and the Uniform Fraudulent Transfers Act ("UFTA"), with certain modifications. For instance, California allows for effectively a seven-year Statute of Limitations for fraudulent transfers in some instances, as opposed to four years in other states.

In furtherance of its pro-creditor bent, the California courts have also recognized civil conspiracy based on fraudulent transfers, which can have the result of making those who attempt to assist the debtor effectively co-liable for the debt to the extent that the creditor was thwarted.

Outside of the exemptions that follow, any other post-judgment debtor planning in California is both extremely risky and unlikely to succeed against a determined creditor. Additionally, one who engages in post-judgment schenanigans runs the very substantial risk of having their discharged denied if they are forced into bankruptcy -- meaning that your assets are wiped out but your creditors remain.

In summary, if you are a debtor then you want to be somewhere else than California because it will be unpleasant unless you started your asset protection long before a "claim" arose against you. And if you are a debtor in California, we have but one word of advice: Flee the state as quickly as you can. Go somewhere like Florida or Texas where debtors are welcome and protected.




  • Exemptions do not apply to foreclosure of a mortgage, deed of trust, lien, or other encumbrance. CCP § 703.010(b).

  • Exemptions only apply to natural persons. CCP § 703.020(a).

  • Spouses may claim their share of an exemption even if they are not a judgment debtor. CCP § 703.020(b)(2).

  • Exemptions may not be waived by agreement. CCP § 703.040.

  • Funds that derive from an exempt asset retain their exemption so long as they can be traced back to the original exempt asset. CCP § 703.080.


  • To benefit from an exemption, the debtor must make a timely claim for the exemption; otherwise, the exemption will have been waived. CCP § 703.030(a).

  • The debtor must file a claim for the exemption within 10 days after the notice of levy on the property was served. CCP § 703.520(a).

  • The debtor's claim for exemption must be made under oath and include a description of the property claimed exempt, a citation to the statute giving rise to the exemption, and a statement of facts supporting the claim of exemption. CCP § 703.520(b).

  • Where the exemption is disputed by the creditor, the court will hold a hearing to determine the disposition of the property. CCP § 703.570.

  • The debtor bears the burden of proving that the property is exempt. CCP § 703.580(b).

  • Where the exemption requires a showing that the property is reasonably necessary for the support of the debtor and the debtor's spouse or dependents, the debtor must also submit a financial statement made under oath that details the debtor's sources of income and lists the debtor's assets and liabilities. CCP § 703.530.




  • By federal law, which California law comports to, wage garnishments are limited to the lesser of 25% of the debtor's wages, or the amount to which the debtor's disposal income exceeds 30 times the federal minimum wage. CCP § 706.050 and 15 U.S.C. § 1673(a).

  • The debtor may also exempt that portion of the debtor's earnings that are necessary for the support of the debtor and any dependents. CCP 706.051.



Exemptions Available Outside or Inside of Bankruptcy

  • The following exemptions are available against California collection attempts in both non-bankruptcy (i.e., normal civil law proceedings) and -- if the debtor elects -- bankruptcy proceedings.

  • In a bankruptcy proceeding, the debtor may elect either these exemptions or the "bankruptcy exemptions" listed in the right column. The debtor cannot elect both exemptions, nor can the debtor pick-and-choose certain exemptions from each list. It is "all or nothing" from each list.

Personal Assets

  • Up to $2,300 in a motor vehicle may be protected. CCP § 704.010.Furniture, appliances, food and clothing is exempt as reasonably necessary for the debtor and family and as ordinarily found in a residence. CCP § 704.020.

  • Up to $2,425 in materials to be used to repair or improve the debtor's residence. CCP § 704.030.

  • Up to $6,075 in jewelry, heirlooms or artwork. CCP § 704.040.

  • Things necessary for the health of the debtor or spouse. § 704.050.

  • Family burial plots are exempt, unless held as investments. CCP § 704.200.

Professional or Trade Assets

  • Tools of the trade, professional equipment, one commercial vehicle, one marine vessel, or other property reasonably necessary for the debtor to earn a living, not exceeding $6,075 (the debtor's spouse also receives a $6,075 exemption for such property). CCP § 704.060.

  • The exemption for a commercial vehicle is limited to $4,850. CCP § 704.060(d).

Wages and Benefits

  • Seventy-five percent of the debtor's earnings are exempt, and previously paid earnings that can be traced to exempt earnings are exempt, but this does not limit support orders. CCP § 704.070.

  • Welfare payments in a direct-deposit account are exempt up to $1,225 if just the debtor is the payee, or up to $1,825 if there are joint payees. CCP § 704.080(b)(1) and (3).

  • Social Security payments in a direct-deposit account are exempt up to $2,425 if just the debtor is the payee, or up to $3,650 if there are joint payees. CCP § 704.080(b)(2) and (4).

  • The portion of the account that can be traced to Social Security or welfare benefits is exempt. CCP § 704.080(c).

  • Educational financial aid payments are exempt. CCP § 704.190.

Life Insurance and Annuities

  • The cash value of a life insurance policy is exempted only to $9,700. CCP § 704.100(b).

  • Payments from matured life insurance policies are exempt only as required for the support of the debtor and any dependents. CCP § 704.100(c).

  • Note: There is no statutory exemption for annuities; however, if the annuity has a life insurance component, that component may qualify for the same treatment as a life insurance policy.

Retirement Plans and IRAs

  • All amounts received from a public retirement plan are exempt, except for support payments. CCP §§ 704.110 and 704.114.

  • Payments from and amounts held in non-qualified private retirement plans and retirement profit sharing plans are exempt, except as against support orders. CCP § 704.115(a)(1) and (2).

  • Payments from and amounts held in qualified plans and individual retirement accounts (IRAs) are partially exempt, except as against support orders, to the amount necessary for the support of the debtor and dependents. CCP §704.115(a)(3) and (e).

  • Unemployment and disability compensation payments and contributions are exempt, except for support orders and some health care providers., CCP §§ 704.120 and 704.130.

Lawsuit Settlements and Awards

  • An award or settlement of a personal injury case is exempt as necessary for the support of the debtor and dependants, unless the creditor has provided health care to the debtor for the injury giving rise to the award or settlement. CCP § 704.140.

  • An award or settlement for wrongful death is exempt as necessary for the support of the debtor and dependants. CCP § 704.150.

  • Except for a support order, payments for workers compensation and disability payments are exempt. CCP § 704.160.


  • A debtor who sells a homestead has six months to reinvest the proceeds into a new homestead or the protection will be lost. CCP § 704.710(c).

  • If the debtor and the debtor's spouse reside in separate homesteads, then only one homestead is exempt. CCP § 704.720(c).

  • Homestead is: $50,000 for a single person; $75,000 if the debtor is married or the head of the family; or $150,000 if the debtor is at least 65 years old, is mentally or physically disabled, or is over 55 years old with an income of less than $15,000 per year. CCP § 704.730.

  • A residential or apartment lease of two years or less is exempt. CCP § 704.740.

  • If a homestead exemption has been filed with the county tax assessor, then it will be presumed that the residence is a homestead and the creditor will bear the burden of proving otherwise; but if a homestead exemption has not been filed, then the debtor bears the burden of proof. CCP § 704.780(a).

  • If the residence is determined to be exempt, the court shall order the sale of the property unless it is not likely to attract a bid of at least the protected value. CCP § 704.780(b).

  • If the homesteaded property receives no bids in excess of the homestead protection, then the property may not be sold at that time and no new sale may be attempted by the creditor for a year afterwards. CCP § 704.800(a).

  • A levy on a homestead shall not trigger a due-on-sale or other acceleration clause. CCP § 704.810.

  • If the residence is owned by the debtor as a joint tenant with somebody else, then the joint tenancy interest and not the property itself shall be sold instead. CCP § 704.820(a).

  • If the residence is owned in joint tenancy by two who are both debtors of the same creditor, then the property itself may be sold, but both debtors are each entitled to their own homestead exemption. CCP § 704.820(a).

  • The proceeds of a sale of a homesteaded property shall be applied as followed: (1) to discharges mortgages, liens or other encumbrances; (2) to the debtor to the limit of their homestead exemption; (3) to the debtor's spouse to the limit of any of their additional homestead exemption; (4) to pay the costs of sale; and (5) to the creditor to the amount of the judgment plus interest, etc. CCP § 704.850.

  • The recording of a homestead declaration prevents a judgment lien from attaching to the property to the amount of the homestead exemption; however, a judgment lien may apply to any value over the homestead exemption amount and this does not prevent a lien created by a support order. CCP § 704.950.

  • The proceeds of a declared homestead are exempt from collection for six months after the date of sale. CCP § 704.960.

The California Exemptions are listed and discussed more fully at


Federal Bankruptcy Exemptions Not Available

  • California has opted out of the federal bankruptcy exemptions, meaning that the provisions of 11 U.S.C. § 522 are not available in California. CCP § 703.130.

  • However, a debtor in bankruptcy may elect one of two exemption regimes, either the standard California exemptions in the right column, or these alternative California bankruptcy exemptions.

  • The debtor must totally accept the exemptions of whichever regime the debtor chooses, and cannot just pick-and-choose from each as the debtor desires. California's Alternative Bankruptcy Exemptions

  • Under the 703.140(b) regime, the debtor may elect the following exemptions in bankruptcy.

Personal Assets

  • An aggregate of $17,425 in real or personal property, which would include an interest in a residence or a burial plot. CCP § 703.140(b)(1)

  • Up to $2,775 in one motor vehicle. CCP § 703.140(b)(2).

  • Up to $450 in the aggregate of furniture, household goods, clothes, books, animals or musical instruments that are used primarily for family purposes. CCP § 703.140(b)(3).

  • Up to $1,150 in jewelry. CCP § 703.140(b)(4).

  • Up to $925 in any property. CCP § 703.140(b)(5).

  • The debtor's prescription health aids. CCP § 703.140(b)(9).

Professional or Trade Assets

  • Up to $1,750 in professional books or tools of the debtor's trade. CCP § 703.140(b)(6).

Life Insurance and Annuities

  • An unmatured life insurance policy owned by the debtor, so long as it is not a credit life insurance contract. CCP § 703.140(b)(7).

  • Up to $9,300 in the cash value of a life insurance policy owned by the debtor or a dependent. CCP § 703.140(b)(8).

Retirement Plans and Payments

  • Social security, unemployment, veteran's benefits, disability benefits. CCP § 703.140(b)(10) (A-D).

  • Retirement or pension payments as needed for the support of the debtor and the debtor's dependence, unless it is a non-tax qualified plan established by an insider employed by the debtor. CCP § 703.140(b)(10)(E).


  • Alimony, as needed for the support of the debtor and the debtor's dependents. CCP § 703.140(b)(10)(D).

Lawsuit Settlements and Awards

  • Money that is traceable to an award for a crime victim. CCP § 703.140(b)(11)(A).

  • To the extent reasonably necessary for the support of the debtor and any dependents of the debtor, payments for wrongful death, as a beneficiary of a life insurance policy, an award for personal injury (but not including pain, suffering, or lost wages, etc.), or loss of future earnings, of any person of whom the debtor was a dependent. CCP § 703.140(b)(11)(B-E).


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Riser Adkisson LLPThe law firm of Riser Adkisson LLP practices in the area of creditor-debtor law in California from its office in Newport Beach. The firm practices both creditor-side (collection and enforcement) and debtor-side (defense).


Jay D. Adkisson



100 Bayview Circle, Suite 210

Newport Beach, CA 92660

Direct: 949-200-7753

Fax: 877-698-0678

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Please note that the firm does not accept judgments for collection that are less than $100,000 or on a pure-contingency-fee basis in most cases. Debtor-side representations are hourly only with a substantial deposit required.

General questions should be addressed to: questions >>>at<<<





© 2010 by Adkisson Publishing Inc. All rights reserved. No portion of this website may be reproduced in whole or any part without the express, written permission of Adkisson Publishing, Inc.. No claim to original government works. Contact Jay D. Adkisson at P.O. Box 7088, Laguna Niguel, CA, 92677, Ph: 949-200-7753, Fax: 877-698-0678, E-Mail: jay [>at<]