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Proposed Legislation Could Help California Debtors with Disabilities


Posted on Jul 07, 2013

A bill before the California Assembly could offer significant help to Californians with physical or mental disabilities when facing extreme financial hardships, according to the National Association of Consumer Bankruptcy Attorneys (NACBA).

Chuck Nicols, a legislative analyst for the Assembly Appropriations Committee, said that the bill could provide “protections desperately needed by the victims of our struggling economy.”

When an individual files for bankruptcy, the law offers certain financial allowances to protect key assets from being taken by creditors. This is done to improve the chances of a successful recovery for the debtor. Because individuals collecting Social Security disability benefits are already on an extremely limited income, these protections, called “exemptions,” are especially important.

Assembly Bill 198 offers the following:

  • $400,000 homestead exemption for the primary residence of a homeowner whose mental or physical handicaps prevents them from maintaining employment. The previous exemption was set at $175,000 in 2010.
  • The same homestead exemption for the primary residence of a homeowner 55 years or older.
  • A debtor collecting Social Security disability would be able to keep up to $500,000 in benefits from a matured life insurance policy, endowment, or annuity, plus whatever is reasonably necessary to support their spouse and dependants. Currently, a debtor may only keep as much of this class of asset as would be necessary to support their spouse and dependants. 

The bill met with approval from the Assembly Judiciary Committee in a seven-to-two vote. It now needs to pass the Appropriations Committee.

A denial decision on your initial SSDI application doesn’t mean you are out of options. If you’re ready to learn about your options, speak with a Chico SSDI attorney. Call the Ledgerwood Law Group at 888-761-7383 to schedule a no-cost consultation today.

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Thomas Ledgerwood
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