California’s 2025 Homestead Exemption: Protecting Your Home Equity in Bankruptcy
If you’re a California homeowner considering bankruptcy, understanding the state’s homestead exemption is essential. This exemption determines how much of your home equity is protected from creditors during bankruptcy — and recent changes for 2025 offer even greater protection.
🔹 What Is the Homestead Exemption?
The homestead exemption shields a portion of your home’s equity in a bankruptcy filing. That means if you have equity in your home, this exemption may allow you to keep your property rather than lose it to creditors.
🔹 2025 Homestead Exemption Amounts in California
As of January 1, 2025, California’s homestead exemption protects between:
➡️ $361,076 and $722,507 of home equity,
depending on the median home price in your county.
For example:
- In Los Angeles County, the 2025 exemption is $722,151
- In Orange County, it is also around $722,507
- In lower-cost counties, the exemption may fall closer to $361,076
This inflation-adjusted range ensures more Californians can protect their homes when filing for bankruptcy.
🔹 Chapter 7 vs. Chapter 13 Implications
- In Chapter 7: If your home equity is within the exemption, you can usually keep your home. If it exceeds the limit, the trustee may sell it, giving you the exempted amount and using the rest to repay creditors.
- In Chapter 13: The exemption affects how much you must repay unsecured creditors over a 3–5 year repayment plan. More exempt equity = less you may need to repay.
🔹 Residency Requirement
To use California’s exemption, you must have lived in the state for at least 730 days (2 years) before filing. If not, you may have to use the exemption rules from your previous state.
🔹 Declared vs. Automatic Homestead
- Automatic Homestead: Applies by default to your primary residence.
- Declared Homestead: You must record a “Declaration of Homestead” with your county. This gives added protection, especially in voluntary sales.
🏠 Should You Be Worried About Losing Your Home?
The updated 2025 exemption makes it more likely than ever that homeowners can keep their homes during bankruptcy. Still, it’s critical to evaluate your unique situation with a qualified attorney.
📞 Get Help Understanding Your Home Equity and Bankruptcy Options
At LeverLaw, we’ve helped thousands of clients across California navigate bankruptcy and protect what matters most — their homes, families, and financial futures.
Call us today or schedule a free consultation to learn how the 2025 homestead exemption can work for you.