Question on CA exemption for unemployment compensation

[empowered]

I'm filing Chapter 7 using CA exemptions because I haven't been in my current state of residence for 2 years.

I see that unemployment compensation is exempt and am wondering whether it should be listed with my exemptions on Schedule C, though it doesn't really make sense to me.

I did list it as income. It is my only income and I am under the median with it. Of course, it's not laying around collecting interest as I try to make it from month to month.

Am I supposed to list some amount for the UI I've collected on the Schedule C and cite the exemption? Or is that just for people who have more money laying around and have more reason to state the exemption?

Thanks.

[justbroke]

Where do you live now? You need to make sure that California allows non-residents to utilize the exemptions! Most States do not allow non-residents to use the exemptions.

I think you should be okay, but I don't know the underlying California exemption laws (System 1 and System 2) to the point that I know that it allows non-residents to claim the exemptions.

[empowered]

Unemployment compensation is exempt in my current state, too, and probably in others. I'm not sure it's necessary or appropriate for me to make it exempt anyway, since I'm under the median and it's shown as income. That plus the fact that it's not in the bank, it's spent as I get it. Seems like it would be odd to exempt money that doesn't linger for long in my bank account. That's why I was kinda trying to figure it out. I wasn't going to exempt it since it doesn't look, at least to me, like I need to.

I sure hope I can use California exemptions. An attorney from my current state that I talked to much earlier this year wanted to use them for me. Plus, since I haven't lived in my current state for two years, my understanding is that I cannot use the ones from this state.

But I'll look around and double-check again.

Thanks.

[empowered]

Okay, did a bit more confirmatory research on exemptions.

Per this website, California has no residency requirement for use of its exemptions:

http://exemptionsexpress.com/Alabama_to_Missouri.html

Thanks for noting that I needed to verify whether my former state had a residency requirement in place for use of its exemptions.

[justbroke]

Just wanted to make sure! Some States don't allow it. It's very generous of California to allow it.

[number5]

Unemployment compensation is exempt in my current state, too, and probably in others. I'm not sure it's necessary or appropriate for me to make it exempt anyway, since I'm under the median and it's shown as income. That plus the fact that it's not in the bank, it's spent as I get it. Seems like it would be odd to exempt money that doesn't linger for long in my bank account. That's why I was kinda trying to figure it out. I wasn't going to exempt it since it doesn't look, at least to me, like I need to.

But, what if you had an emergency fund with a good bit put back for a situation such as this? Since Unemployment Income is exempt, that means (as far as I understand it, anyway) that you could let that money accumulate, and it can't be touched. Spend the money in your emergency fund first. You just have to make sure that the UI money does not get "tainted" by anything else. I.e. you need it to go to its own account, where the only money in that account is from the UI. You can open a separate account just for UI to be deposited into, get the debit card, etc.

Here's a hypothetical situation to better illustrate it. You have $5k in a savings account just for emergencies. You lose your job, and get UI benefits. You spend the UI money and don't touch the savings account. On the date you file, you've spent $3k in UI benefits, and still have your $5k in savings. If you can't exempt the $5k in savings, the trustee can get it. Now if you instead spent $3k out of your savings account for your day-to-day expenses, and didn't touch your UI, now you have $3k sitting in your UI account, and $2k in savings. You only have to worry about exempting the $2k in savings (else the trustee can get it). In both scenarios you have $5k available on the date of filing...but in the second scenario you have $3k that is automatically exempt.

Of course there's many ways to make this work for you. Maybe you have no emergency fund, but have a car with way too much equity? Sell the car, buy a cheaper one, and use the excess funds for day-to-day expenses, and let the UI accumulate. Etc.

[empowered]

Thanks for going to the trouble of explaining that to me. That would be a nice trick. If only I was that kind of bankrupt and had to exempt my unemployment. Sigh...

[justbroke]

Be very careful in places where you are "hoarding" money in an exempt class. Many States have a little clause that, while allowing you to exempt things like child support and UI benefits, states "to the extend necessary". That little part of the sentence has hurt a lot of people who "saved" the money. I'm just advising any debtor to be cautious and that you should always use legal representation to protect your assets. If you can't afford an attorney, you need to know these things.

Someone on this board just went through this as a pro se debtor. The Trustee's don't care. The Trustee usually immediately object to the claim of exemption and require the debtor to prove the source and prove that it's "necessary".

[bts]

The Trustee usually immediately object to the claim of exemption and require the debtor to prove the source and prove that it's "necessary".

Curious, how do they expect you to prove it's necessary?

for instance, say i bought a computer and said I needed it for school?....nothing short of a letter from the school saying I 'needed' it would suffice?

[justbroke]

Curious, how do they expect you to prove it's necessary?

Usually, you can't. That's the point... if you allowed it to accumulate and didn't need it all those months, what does hoarding it do for you now?

I'm just saying that you should be sure that your State allows you to exempt the money regardless of "need". If your State treats UI benefits as a benefit received under the Social Security Act (SSA), then this is all moot, since other parts of the United States Code exempts SSA funds received or to be received from other being accessible by creditors or by a bankruptcy proceeding.

I just want other debtors (future reading this), that they should make sure that the money is safe before assuming otherwise.

[LadyInTheRed]

Make sure you are using the current CA exemptions. Many were increased as of April 1, but the increases aren't reflected in the code sections or on websites that list exemptions because the code provides for an increase every 3 years based on the consumer price index, without amending the law. The April 1, 2010 adjustments can be found at: http://www.courtinfo.ca.gov/forms/do...exemptions.pdf Page 1 is adjustements to System 1 (Code of Civil Procedure (CCP) Section 704.010 et. seq.) and Page 2 is System 2 (CCP Section 703.240(b)).

[empowered]

Uh-oh. I filed yesterday. Well, I used the Homestead exemption multiple times and, frankly, I think most of my exemptions are fairly minimal. So I hope I'm under any changes to minimize exemptions amounts.

I guess I'll see what the trustee says, though perhaps I should double-check and ensure I'm ahead of the game.

Thanks LadyInTheRed, and, I must say, how cool a bankruptcy forum handle is that!

[LadyInTheRed]

Uh-oh. I filed yesterday. Well, I used the Homestead exemption multiple times and, frankly, I think most of my exemptions are fairly minimal. So I hope I'm under any changes to minimize exemptions amounts.

I guess I'll see what the trustee says, though perhaps I should double-check and ensure I'm ahead of the game.

Thanks LadyInTheRed, and, I must say, how cool a bankruptcy forum handle is that!

Thanks.

I'm pretty sure that all of the adjustments to exemptions were increases. At least the ones I've focused on were. For example, the homestead exemption is $22,075 (up from $20,725) and the additional wildcard is $1,175 (up from $1,110). I'm sure you'll be fine.