703 vs. 704: Which Exemptions Should I Choose?

by Johnny Tisdale on February 4, 2013

If you file for bankruptcy in California, you must choose between two sets of exemptions. It is recommended that you retain an experienced bankruptcy attorney to ensure that you make the right choice.


As if there weren’t already enough tough decisions involved in the bankruptcy process, California debtors must also decide which exemptions to use. The two available options are called the 703 exemptions and the 704 exemptions because they are listed under sections 703 and 704 of the California Code of Civil Procedure. Whether you get to keep an item of personal property depends on whether it is considered exempt. It is therefore important that you make an informed decision based on the specific details of your personal situation. Consulting an experienced bankruptcy attorney is the best way to do that.

What’s the main difference between the 703 and 704 exemptions?

There are two main differences between these two sets of exemptions. First, the 704 exemptions allow the debtor to keep a greater amount of the value in his or her home. Second, the 703 exemptions give the debtor a wildcard, whereas the 704 exemptions do not. For these reasons, the 703 and 704 exemptions are also known as the “wildcard” and “homestead” exemptions, respectively.

When disclosing all of your assets to the bankruptcy trustee, you must list each piece of property under the appropriate category, such as cash on hand, checking accounts, household goods and furnishings, automobiles, wearing apparel, or animals (to name only a few). Only a certain amount of value is exempted for each category. That amount differs according to the set of exemptions you choose. Take jewelry, for example. Under the 703 exemptions, the debtor can exempt up to $1,425 worth of jewelry. Under the 704 exemptions, the limit is $7,175.

The 704 exemptions are called the homestead exemptions because they allow the debtor to exempt a much higher amount of the value in his or her home – $75,000, $100,000, or $175, 000 (depending on the circumstances), compared to $24,060 under the 703 exemptions. While the 703 exemptions have a much less generous homestead exemption, they do offer the debtor a wildcard – meaning that any unused amount of the homestead exemption can be applied to other pieces of property. For example, suppose that you use only $20,000 of the homestead exemption under §703. In this case, you have a $4,060 wildcard which can be applied to other items, like books or musical instruments.

How do I know whether to use the 703 or 704 exemptions?

While it is possible to offer a generalized (and therefore simplified) answer to this question, such an answer should in no way be construed as legal advice. To really make an informed decision, you should seek the advice of an expert who is familiar with the twists and turns of bankruptcy law.

The 703 exemptions might be preferable if you do not own a home, especially if you have more assets in another category than you can exempt. This will allow you to use your wildcard to exempt those assets. For example, suppose that you own $15,000 worth of jewelry. Without the wildcard, you would only be able to keep $1,425 worth. With the wildcard, you can keep all of it.

The 704 exemptions might be preferable if you have a substantial amount of equity in your home. Then you can use the generous homestead exemption to ensure that you get to keep your primary residence. As mentioned, the exact limit of the homestead exemption under §704 depends on your situation. The “default” amount is $75,000. If a family member with no ownership interest also lives in the home, the amount is $100,000. If you are 65 years of age or older, the amount is $175,000. There are other exceptions as well. This is yet another reason to ask a bankruptcy attorney for help.

How do I find an experienced bankruptcy attorney?

Good news: You already have! Attorney Hermin Dowe stays up-to-date on the constantly changing bankruptcy laws of California. Please give us a call at 510-233-7700 or visit our website at DoweBankruptcyLaw.com to schedule your free consultation.

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Johnny Tisdale

Paralegal at Dowe Law Firm
Johnny Tisdale is a paralegal, web designer, and writer at the Dowe Law Firm. He earned his BS in psychology and ABA-approved paralegal certificate from Auburn University Montgomery in 2011.

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