Your home is undoubtedly one of your most valuable assets, but it can also be the most expensive. Think about it; you’ve got bills to pay, mortgages, insurance costs, property taxes, and maintenance costs. How does mortgage exemptions come into play? The homestead exemption laws are there to protect you, or at least some value of your home, against creditors.

While these laws typically vary by state, the general idea is that part of your home equity is protected from creditors trying to collect their debt if you file for bankruptcy. Here’s a simple guide to homestead exemptions for public employees in California. 

The California Mortgage Exemptions Explained

There are some states that allow people to file for bankruptcy using the federal bank exemptions, but California requires you to use the state system.1 As a public employee in this state, you can either use the California System 1 bankruptcy exemption or the System 2.

California System 1 Bankruptcy System

If you’re a single homeowner without a disability, $75000 of your home’s equity counts as exemptions. If you live with a family member, the exemption is $100,000. The exemption goes to $175,000 if you’re single and above 55 years. This, however, only applies if your home is at risk of sale by creditors.

California System 2 Bankruptcy System

Under this system, you can have up to $29,275 of your home’s equity.  These amounts are updated every 3 years, and that last change was done in April 2019.

Which Types of Properties are Protected Under These Exemptions?

Under the California System 1, the property covered includes:

  • Your residential property including community apartments, boats, condos, planned development, and mobile homes
  • All proceeds from your home’s forced sale done 6 months before you file for bankruptcy.

Under the California System 2 law, the exemption applies to a debtor’s residential property, including your burial plot (or that of your dependents) and cooperatives. 

How Long Should You Have Owned the Property?

To claim the whole homestead exemption value, have the property for not less than 1,215 days before you file for bankruptcy. Failure to meet this requirement may result in the federal law limiting your exemption. While some states can allow you and your partner to file for joint bankruptcy in a bid to double your exemption amount, you can’t do that in California. 

Mortgage Exemptions: When Should You File a Homestead Declaration?

You don’t have to file for a declaration in California because the exemption is automatic. You’ll, however, have to claim the exemption as you file for bankruptcy.  Your property is a huge asset. Talk to one of our expert advisors about the CalPATH Home Loan Program and how you can use your mortgage to increase your savings. 


“About Mountain West Financial and the CalPATH Home Loan Program Mountain West Financial is the exclusive lender offering CalPATH, the #1 home loan program for Teachers, Police Officers, Firefighters, and other public employees who serve our local California communities.

You may contact our CalPATH Hotline @ 800-310-7577, seven days a week from (8:30 am to 8:00 pm). A CalPATH advisor will be standing by to answer (any & all) questions you may have about the home buying or refinance process.

We look forward to working with you soon!

Sincerely, Joe Moore – Branch Manager”


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