The National Association of Consumer Bankruptcy Attorneys ("NACBA") filed an amicus brief addressing the constitutionality of Michigan's bankruptcy specific exemption scheme in In re Schafer, No. 11-1340 (6th Cir.) NACBA's brief argues that section 522(b)(3)(A) of the Bankruptcy Code permits the states to enact whatever exemption laws deemed appropriate without regard to whether those laws are limited to bankruptcy debtors or applicable to all debtors in the state. Joining in the amicus brief were the National Consumer Law Center, Legal Services Association of Michigan, The Michigan Poverty Law Program and the Council of the Consumer Law Section of the State Bar of Michigan.
The State of California does not allow a debtor to use Federal bankruptcy exemptions under Title 11 of the United States Code ("Title 11 U.S.C.). For example, California has two sets of exemptions which can be used in a bankruptcy case. The exemptions are codified in California Code of Civil Procedure sections 703 and 704. A bankruptcy debtor is required to select only one set of exemptions. Click here to read the California exemptions under section 703. You may also click here to review the California exemptions under section 704. If you have any questions, contact me to discuss your options and avenues.
For example, in discussing C.C.P. ยง 704.730(a)(3), the United States Bankruptcy Court for the Southern District of California held that, to determine Chapter 7 debtor's "gross annual income," for purpose of deciding whether debtor was entitled to enhanced $150,000 homestead exemption accorded by the California legislature to debtors who are at least 55 years old and who have annual gross incomes of no more than $15,000, bankruptcy court had to deduct from gross receipts of business that debtor operated as sole proprietorship any legitimate business expenses, without regard to whether debtor's business was service oriented or was a more capital intensive enterprise, such as retail sales. See In re Bush, 346 B.R. 207. Generally, gross annual income has been interpreted as income from debtors gross receipts if he/she owns a business reduced by the expenses of that company. Gross annual income is the functional equivalent of "adjusted gross income" as used for computing taxes, i.e., wages, salaries, etc. or other income less the variety of possible deductions. See Shelly v. Kendall (In re Shelly), 184 B.R. 356, 358 (9th Cir. BAP 1995) affd. 109 F.3d 639 (9th Cir. 1997).
