Amended in Senate April 6, 2015

Senate Bill No. 308

Introduced by Senator Wieckowski

February 23, 2015

An act to amend Section 2983.3 of the Civil Code, and to amend Sections 703.140, 704.010, 704.113, 704.115, 704.720, 704.730, and 704.960 of, and to add Sections 704.085, 704.111, and 704.165 to, the Code of Civil Procedure, relating to bankruptcy.

LEGISLATIVE COUNSEL’S DIGEST

SB 308, as amended, Wieckowski. Debtor exemptions.

Existing law begin delete provides end delete prohibits the seller or holder of a conditional sale contract for a motor vehicle from accelerating the maturity of any part or all of the amount due under the contract or repossessing the vehicle in the absence of default in the performance of any of the buyer’s obligations under the contract.

This bill would provide that neither the act of filing a bankruptcy petition by the buyer or other individual liable on the contract nor the status of either of those persons as a debtor in bankruptcy constitutes a default in the performance of any of the buyer’s obligations under the contract and neither may be used as a basis for accelerating the maturity of any part or all of the amount due under the contract or for repossessing the motor vehicle.

Existing law identifies various types of property of a judgment debtor that are exempt from the enforcement of a money judgment. Existing law provides that property described in statute as exempt may be claimed within the time and in the manner prescribed in the applicable enforcement procedure, and property described in statute as exempt without making a claim is not subject to any procedure for enforcement of a money judgment. These general exemptions are available to a debtor in a federal bankruptcy case, whether a money judgment is being enforced by execution sale or other procedure, unless the debtor elects certain alternative exemptions.

begin insert

Existing law requires the Judicial Council to, every 3 years, adjust the amount of the exemptions applicable to exempt property based on the change in the annual California Consumer Price Index for All Urban Consumers, and to prepare conforming forms for those adjustments.

end insert begin insert

This bill would increase the statutory amounts of various exemptions to reflect the amounts of the exemptions as adjusted by the Judicial Council effective April 1, 2013.

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Existing law authorizes a husband and wife who jointly file a bankruptcy petition to jointly elect to utilize the general exemptions or the alternative exemptions, but not both. The general exemptions are applicable if a bankruptcy petition is filed individually, and not jointly, for a husband or a wife, except that the husband and wife may jointly waive in writing their right to claim, during the period the case commenced by filing the petition is pending, the general exemptions and instead elect to utilize the alternative exemptions.

This bill would provide that a joint waiver is not required from a debtor who is separated from his or her spouse as of the date the bankruptcy petition is filed.

Existing law includes an alternative exemption for the debtor’s right to receive a payment under a stock bonus, pension, profit-sharing, annuity, or similar plan or contract on account of illness, disability, death, age, or length of service to the extent reasonably necessary for the support of the debtor and any dependent of the debtor, unless all of several specified conditions apply, including that the plan or contract does not qualify under specified provisions of the federal Internal Revenue Code of 1986.

This bill would provide that a plan or contract covered by this alternative exemption would be exempt even if it did not qualify under the specified provisions of the federal Internal Revenue Code of 1986 so long as the sole basis for the failure to qualify is a technical defect.

Existing law includes alternative exemptions for the debtor’s right to receive, or property that is traceable to, a payment on account of the wrongful death of an individual of whom the debtor was a dependent and a payment under a life insurance contract that insured the life of an individual of whom the debtor was a dependent on the date of that individual’s death.

This bill would make these exemptions applicable, as well, to payments regarding an individual of whom the debtor was a spouse.

Existing law includes an alternative exemption for the debtor’s right to receive, or property that is traceable to, a payment begin delete up to $24,060 end delete on account of personal bodily injury of the debtor or an individual of whom the debtor is a dependent. begin insert Existing law sets this amount as $25,575, as adjusted by the Judicial Council. end insert

This bill would make this exemption applicable, as well, to a payment on account of personal bodily injury of the spouse of the debtor.

Existing law includes an alternative exemption for the debtor’s right to receive, or property that is traceable to, a payment in compensation of loss of future earnings of the debtor or an individual of whom the debtor is or was a dependent to the extent reasonably necessary for the support of the debtor and a dependent of the debtor.

This bill would make this exemption applicable, as well, to a payment regarding an individual of whom the debtor is or was a spouse, and would provide that the exemption applies to the extent reasonably necessary for the support of the debtor and a spouse or dependent of the debtor.

Existing law provides that vacation credits, as defined, are exempt from enforcement of a money judgment without making a claim.

This bill would delete the definition of “vacation credits” set forth in these provisions and expand this general exemption to also include accrued or unused vacation pay, sick leave, and family leave. The bill also would add an alternative exemption for the debtor’s right to receive these expanded assets.

Existing law begin delete provides that up to $2,300 of end delete begin insert exempts end insert any combination of aggregate equity in motor vehicles, the proceeds of an execution sale of a motor vehicle, and the proceeds of insurance or other indemnification for the loss, damage, or destruction of a motor begin delete vehicle, is exempt. end delete begin insert vehicle. Existing law sets this amount of this exemption, as adjusted by the Judicial Council, at $2,900. end insert Existing law includes an alternative exemption for up to begin delete $4,800 end delete begin insert $5,100, as adjusted by the Judicial Council, end insert of the debtor’s interest in one or more motor vehicles.

This bill would increase the amount of the general and alternative exemption for motor vehicle equity to $6,000, and make conforming changes.

This bill would provide that the aggregate interest of a debtor who is engaged in business, not to exceed begin delete five thousand dollars end delete ($5,000), in cash or deposit accounts, accounts receivable, and inventory of the business is exempt.

Existing law includes an alternative exemption for the debtor’s right to receive alimony, support, or separate maintenance, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor.

This bill would provide that these assets are exempt, thereby adding a general exemption matching the existing alternative exemption.

Existing law provides that all amounts held, controlled, or in process of distribution by a private retirement plan, for the payment of benefits as an annuity, pension, retirement allowance, disability payment, or death benefit from a private retirement plan are exempt. Existing law defines “private retirement plan” to include self-employed retirement plans and individual retirement annuities or accounts provided for in the federal Internal Revenue Code of 1986, including individual retirement accounts qualified under specified provisions of that code.

This bill would expand this exemption to also include individual retirement accounts that do not qualify under those specified provisions on the basis of a technical defect alone.

Existing law provides that various causes of action and awards of damages or settlements arising out of those actions are exempt to varying extent, as specified.

This bill would provide that a cause of action arising out of or regarding the violation of any law relating to the judgment debtor’s employment is exempt without making a claim, except as provided in specified statutory provisions, and an award of damages or a settlement arising out of or regarding the violation of any law relating to the judgment debtor’s employment is exempt to the extent necessary for the support of the judgment debtor and the spouse and dependents of the judgment debtor. The bill also would add identical alternative exemptions in this regard.

Existing law provides that the proceeds of sale or of insurance or other indemnification for damage or destruction of a homestead, the proceeds received as compensation for a homestead acquired for public use, or the proceeds from a voluntary sale of a declared homestead, are exempt in the amount of the homestead exemption provided in a specified statute for a period of begin delete six end delete begin insert 6 end insert months after the time the proceeds are actually received by the judgment debtor, except as provided.

This bill would delete the begin delete six end delete begin insert 6 end insert -month limitation on these exemptions, thereby making these proceeds exempt indefinitely, and make conforming changes.

Existing law provides that a specified portion of equity in a homestead, as defined, is exempt from execution to satisfy a judgment debt and prescribes that the amount of the homestead exemption is either $75,000, $100,000, or $175,000, depending on certain characteristics of the homestead’s residents.

This bill would instead provide that the homestead exemption may not exceed $700,000 unless the homestead is no greater than 320 acres and is used primarily for agricultural purposes, in which case the homestead exemption would be unlimited.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 2983.3 of the Civil Code is amended to
read:

2983.3.  

(a) (1) In the absence of default in the performance
of any of the buyer’s obligations under the contract, the seller or
holder may not accelerate the maturity of any part or all of the
amount due thereunder or repossess the motor vehicle.

(2) Neither the act of filing a petition commencing a case for
bankruptcy under Title 11 of the United States Code by the buyer
or other individual liable on the contract nor the status of either of
those persons as a debtor in bankruptcy constitutes a default in the
performance of any of the buyer’s obligations under the contract,
and neither may be used as a basis for accelerating the maturity
of any part or all of the amount due under the contract or for
repossessing the motor vehicle.

(b) If after default by the buyer, the seller or holder repossesses
or voluntarily accepts surrender of the motor vehicle, any person
liable on the contract shall have a right to reinstate the contract
and the seller or holder shall not accelerate the maturity of any
part or all of the contract prior to expiration of the right to reinstate,
unless the seller or holder reasonably and in good faith determines
that any of the following has occurred:

(1) The buyer or any other person liable on the contract by
omission or commission intentionally provided false or misleading
information of material importance on his or her credit application.

(2) The buyer, any other person liable on the contract, or any
permissive user in possession of the motor vehicle, in order to
avoid repossession has concealed the motor vehicle or removed it
from the state.

(3) The buyer, any other person liable on the contract, or any
permissive user in possession of the motor vehicle, has committed
or threatens to commit acts of destruction, or has failed to take
care of the motor vehicle in a reasonable manner, so that the motor
vehicle has become substantially impaired in value, or the buyer,
any other person liable on the contract, or any nonoccasional
permissive user in possession of the motor vehicle has failed to
take care of the motor vehicle in a reasonable manner, so that the
motor vehicle may become substantially impaired in value.

(4) The buyer or any other person liable on the contract has
committed, attempted to commit, or threatened to commit criminal
acts of violence or bodily harm against an agent, employee, or
officer of the seller or holder in connection with the seller’s or
holder’s repossession of or attempt to repossess the motor vehicle.

(5) The buyer has knowingly used the motor vehicle, or has
knowingly permitted it to be used, in connection with the
commission of a criminal offense, other than an infraction, as a
consequence of which the motor vehicle has been seized by a
federal, state, or local agency or authority pursuant to federal, state,
or local law.

(6) The motor vehicle has been seized by a federal, state, or
local public agency or authority pursuant to (A) Section 1324 of
Title 8 of the United States Code or Part 274 of Title 8 of the Code
of Federal Regulations, (B) Section 881 of Title 21 of the United
States Code or Part 9 of Title 28 of the Code of Federal
Regulations, or (C) other federal, state, or local law, including
regulations, and, pursuant to that other law, the seizing authority,
as a precondition to the return of the motor vehicle to the seller or
holder, prohibits the return of the motor vehicle to the buyer or
other person liable on the contract or any third person claiming
the motor vehicle by or through them or otherwise effects or
requires the termination of the property rights in the motor vehicle
of the buyer or other person liable on the contract or claimants by
or through them.

(c) Exercise of the right to reinstate the contract shall be limited
to once in any 12-month period and twice during the term of the
contract.

(d) The provisions of this subdivision cover the method by
which a contract shall be reinstated with respect to curing events
of default which were a ground for repossession or occurred
subsequent to repossession:

(1) Where the default is the result of the buyer’s failure to make
any payment due under the contract, the buyer or any other person
liable on the contract shall make the defaulted payments and pay
any applicable delinquency charges.

(2) Where the default is the result of the buyer’s failure to keep
and maintain the motor vehicle free from all encumbrances and
liens of every kind, the buyer or any other person liable on the
contract shall either satisfy all encumbrances and liens or, in the
event the seller or holder satisfies the encumbrances and liens, the
buyer or any other person liable on the contract shall reimburse
the seller or holder for all reasonable costs and expenses incurred
therefor.

(3) Where the default is the result of the buyer’s failure to keep
and maintain insurance on the motor vehicle, the buyer or any
other person liable on the contract shall either obtain the insurance
or, in the event the seller or holder has obtained the insurance, the
buyer or any other person liable on the contract shall reimburse
the seller or holder for premiums paid and all reasonable costs and
expenses, including, but not limited to, any finance charge in
connection with the premiums permitted by Section 2982.8,
incurred therefor.

(4) Where the default is the result of the buyer’s failure to
perform any other obligation under the contract, unless the seller
or holder has made a good faith determination that the default is
so substantial as to be incurable, the buyer or any other person
liable on the contract shall either cure the default or, if the seller
or holder has performed the obligation, reimburse the seller or
holder for all reasonable costs and expenses incurred in connection
therewith.

(5) Additionally, the buyer or any other person liable on the
contract shall, in all cases, reimburse the seller or holder for all
reasonable and necessary collection and repossession costs and
fees incurred, including attorney’s fees and legal expenses
expended in retaking and holding the vehicle.

(e) If the seller or holder denies the right to reinstatement under
subdivision (b) or paragraph (4) of subdivision (d), the seller or
holder shall have the burden of proof that the denial was justified
in that it was reasonable and made in good faith. If the seller or
holder fails to sustain the burden of proof, the seller or holder shall
not be entitled to a deficiency, but it shall not be presumed that
the buyer is entitled to damages by reason of the failure of the
seller or holder to sustain the burden of proof.

(f) This section shall not apply to a loan made by a lender
licensed under Division 9 (commencing with Section 22000) of
the Financial Code.

SEC. 2.  

Section 703.140 of the Code of Civil Procedure is
amended to read:

703.140.  

(a) In a case under Title 11 of the United States Code,
all of the exemptions provided by this chapter, including the
homestead exemption, other than the provisions of subdivision (b)
are applicable regardless of whether there is a money judgment
against the debtor or whether a money judgment is being enforced
by execution sale or any other procedure, but the exemptions
provided by subdivision (b) may be elected in lieu of all other
exemptions provided by this chapter, as follows:

(1) If a husband and wife are joined in the petition, they jointly
may elect to utilize the applicable exemption provisions of this
chapter other than the provisions of subdivision (b), or to utilize
the applicable exemptions set forth in subdivision (b), but not both.

(2) If the petition is filed individually, and not jointly, for a
husband or a wife, the exemptions provided by this chapter other
than the provisions of subdivision (b) are applicable, except that,
if both the husband and the wife effectively waive in writing the
right to claim, during the period the case commenced by filing the
petition is pending, the exemptions provided by the applicable
exemption provisions of this chapter, other than subdivision (b),
in any case commenced by filing a petition for either of them under
Title 11 of the United States Code, then they may elect to instead
utilize the applicable exemptions set forth in subdivision (b). A
waiver is not required, however, from a debtor who is separated
from his or her spouse as of the date the petition commencing the
case under Title 11 of the United States Code is filed.

(3) If the petition is filed for an unmarried person, that person
may elect to utilize the applicable exemption provisions of this
chapter other than subdivision (b), or to utilize the applicable
exemptions set forth in subdivision (b), but not both.

(b) The following exemptions may be elected as provided in
subdivision (a):

(1) The debtor’s aggregate interest, not to exceed begin delete twenty-four
thousand sixty dollars ($24,060) end delete begin insert twenty-five thousand five hundred
seventy-five dollars ($25,575) end insert in value, in real property or personal
property that the debtor or a dependent of the debtor uses as a
residence, in a cooperative that owns property that the debtor or a
dependent of the debtor uses as a residence.

(2) The debtor’s interest, not to exceed six thousand dollars
($6,000) in value, in one or more motor vehicles.

(3) The debtor’s interest, not to exceed six hundred begin insert fifty end insert dollars
begin delete ($600) end delete begin insert ($650) end insert in value in any particular item, in household
furnishings, household goods, wearing apparel, appliances, books,
animals, crops, or musical instruments, that are held primarily for
the personal, family, or household use of the debtor or a dependent
of the debtor.

(4) The debtor’s aggregate interest, not to exceed one thousand
begin delete four end delete begin insert five end insert hundred twenty-five dollars begin delete ($1,425) end delete begin insert ($1,525) end insert in value,
in jewelry held primarily for the personal, family, or household
use of the debtor or a dependent of the debtor.

(5) The debtor’s aggregate interest, not to exceed in value one
thousand begin delete two end delete begin insert three end insert hundred begin delete eighty end delete begin insert fifty end insert dollars begin delete ($1,280) end delete begin insert ($1,350) end insert
plus any unused amount of the exemption provided under
paragraph (1), in any property.

(6) The debtor’s aggregate interest, not to exceed begin delete seven thousand
one hundred seventy-five dollars ($7,175) end delete begin insert seven thousand six
hundred twenty-five dollars ($7,625) end insert in value, in any implements,
professional books, or tools of the trade of the debtor or the trade
of a dependent of the debtor.

(7) Any unmatured life insurance contract owned by the debtor,
other than a credit life insurance contract.

(8) The debtor’s aggregate interest, not to exceed in value begin delete twelve end delete
begin insert thirteen end insert thousand begin delete eight end delete begin insert six end insert hundred begin delete sixty end delete begin insert seventy-five end insert dollars
begin delete ($12,860), end delete begin insert ($13,675), end insert in any accrued dividend or interest under,
or loan value of, any unmatured life insurance contract owned by
the debtor under which the insured is the debtor or an individual
of whom the debtor is a dependent.

(9) Professionally prescribed health aids for the debtor or a
dependent of the debtor.

(10) The debtor’s right to receive any of the following:

(A) A social security benefit, unemployment compensation, or
a local public assistance benefit.

(B) A veterans’ benefit.

(C) A disability, illness, or unemployment benefit.

(D) Alimony, support, or separate maintenance, to the extent
reasonably necessary for the support of the debtor and any
dependent of the debtor.

(E) A payment under a stock bonus, pension, profit-sharing,
annuity, or similar plan or contract on account of illness, disability,
death, age, or length of service, to the extent reasonably necessary
for the support of the debtor and any dependent of the debtor,
unless all of the following apply:

(i) That plan or contract was established by or under the auspices
of an insider that employed the debtor at the time the debtor’s
rights under the plan or contract arose.

(ii) The payment is on account of age or length of service.

(iii) That plan or contract does not qualify under Section 401(a),
403(a), 403(b), 408, or 408A of the Internal Revenue Code of
1986, as amended, on a basis other than a technical defect alone.

(F) Vacation credits or accrued, or unused, vacation pay, sick
leave, or family leave.

(11) The debtor’s right to receive, or property that is traceable
to, any of the following:

(A) An award under a crime victim’s reparation law.

(B) A payment on account of the wrongful death of an individual
of whom the debtor was a spouse or dependent, to the extent
reasonably necessary for the support of the debtor and any
dependent of the debtor.

(C) A payment under a life insurance contract that insured the
life of an individual of whom the debtor was a spouse or dependent
on the date of that individual’s death, to the extent reasonably
necessary for the support of the debtor and any dependent of the
debtor.

(D) A payment, not to exceed begin delete twenty-four end delete begin insert twenty-five end insert thousand
begin delete sixty end delete begin insert five hundred seventy-five end insert dollars begin delete ($24,060), end delete begin insert ($25,575), end insert on
account of personal bodily injury of the debtor, the spouse of the
debtor, or an individual of whom the debtor is a dependent.

(E) A payment in compensation of loss of future earnings of
the debtor or an individual of whom the debtor is or was a spouse
or dependent, to the extent reasonably necessary for the support
of the debtor and a spouse or dependent of the debtor.

(12) (A) Except as provided in Article 5 (commencing with
Section 708.410) of Chapter 6, a cause of action arising out of or
regarding the violation of any law relating to the judgment debtor’s
employment is exempt without making a claim.

(B) An award of damages from or a settlement arising out of or
regarding the violation of any law relating to the judgment debtor’s
employment is exempt to the extent necessary for the support of
the judgment debtor and the spouse and dependents of the judgment
debtor.

SEC. 3.  

Section 704.010 of the Code of Civil Procedure is
amended to read:

704.010.  

(a) Any combination of the following is exempt in
the amount of six thousand dollars ($6,000):

(1) The aggregate equity in motor vehicles.

(2) The proceeds of an execution sale of a motor vehicle.

(3) The proceeds of insurance or other indemnification for the
loss, damage, or destruction of a motor vehicle.

(b) Proceeds exempt under subdivision (a) are exempt for a
period of 90 days after the time the proceeds are actually received
by the judgment debtor.

(c) For the purpose of determining the equity, the fair market
value of a motor vehicle shall be determined by reference to used
car price guides customarily used by California automobile dealers
unless the motor vehicle is not listed in such price guides.

(d) If the judgment debtor has only one motor vehicle and it is
sold at an execution sale, the proceeds of the execution sale are
exempt in the amount of six thousand dollars ($6,000) without
making a claim. The levying officer shall consult and may rely
upon the records of the Department of Motor Vehicles in
determining whether the judgment debtor has only one motor
vehicle. In the case covered by this subdivision, the exemption
provided by subdivision (a) is not available.

SEC. 4.  

Section 704.085 is added to the Code of Civil
Procedure, to read:

704.085.  

The aggregate interest of a debtor who is engaged in
a business, not to exceed five thousand dollars ($5,000), in cash
or deposit accounts, accounts receivable, and inventory of the
business is exempt.

SEC. 5.  

Section 704.111 is added to the Code of Civil
Procedure, to read:

704.111.  

Alimony, support, and separate maintenance, to the
extent reasonably necessary for the support of the debtor and any
dependent of the debtor, are exempt.

SEC. 6.  

Section 704.113 of the Code of Civil Procedure is
amended to read:

704.113.  

(a) All vacation credits or accrued, or unused,
vacation pay, sick leave, or family leave is exempt without making
a claim.

(b) Amounts paid periodically or as a lump sum representing
vacation credits are subject to any earnings withholding order
served under Chapter 5 (commencing with Section 706.010) or
any earnings assignment order for support as defined in Section
706.011 and are exempt to the same extent as earnings of a
judgment debtor.

SEC. 7.  

Section 704.115 of the Code of Civil Procedure is
amended to read:

704.115.  

(a) As used in this section, “private retirement plan”
means:

(1) Private retirement plans, including, but not limited to, union
retirement plans.

(2) Profit-sharing plans designed and used for retirement
purposes.

(3) Self-employed retirement plans and individual retirement
annuities or accounts provided for in the Internal Revenue Code
of 1986, as amended, including individual retirement accounts
qualified under Section 408 or 408A of that code and accounts
that do not qualify on the basis of a technical defect alone, to the
extent the amounts held in the plans, annuities, or accounts do not
exceed the maximum amounts exempt from federal income taxation
under that code.

(b) All amounts held, controlled, or in process of distribution
by a private retirement plan, for the payment of benefits as an
annuity, pension, retirement allowance, disability payment, or
death benefit from a private retirement plan are exempt.

(c) Notwithstanding subdivision (b), where an amount described
in subdivision (b) becomes payable to a person and is sought to
be applied to the satisfaction of a judgment for child, family, or
spousal support against that person:

(1) Except as provided in paragraph (2), the amount is exempt
only to the extent that the court determines under subdivision (c)
of Section 703.070.

(2) If the amount sought to be applied to the satisfaction of the
judgment is payable periodically, the amount payable is subject
to an earnings assignment order for support as defined in Section
706.011 or any other applicable enforcement procedure, but the
amount to be withheld pursuant to the assignment order or other
procedure shall not exceed the amount permitted to be withheld
on an earnings withholding order for support under Section
706.052.

(d) After payment, the amounts described in subdivision (b)
and all contributions and interest thereon returned to any member
of a private retirement plan are exempt.

(e) Notwithstanding subdivisions (b) and (d), except as provided
in subdivision (f), the amounts described in paragraph (3) of
subdivision (a) are exempt only to the extent necessary to provide
for the support of the judgment debtor when the judgment debtor
retires and for the support of the spouse and dependents of the
judgment debtor, taking into account all resources that are likely
to be available for the support of the judgment debtor when the
judgment debtor retires. In determining the amount to be exempt
under this subdivision, the court shall allow the judgment debtor
such additional amount as is necessary to pay any federal and state
income taxes payable as a result of the applying of an amount
described in paragraph (3) of subdivision (a) to the satisfaction of
the money judgment.

(f) Where the amounts described in paragraph (3) of subdivision
(a) are payable periodically, the amount of the periodic payment
that may be applied to the satisfaction of a money judgment is the
amount that may be withheld from a like amount of earnings under
Chapter 5 (commencing with Section 706.010). To the extent a
lump-sum distribution from an individual retirement account is
treated differently from a periodic distribution under this
subdivision, any lump-sum distribution from an account qualified
under Section 408A of the Internal Revenue Code shall be treated
the same as a lump-sum distribution from an account qualified
under Section 408 of the Internal Revenue Code for purposes of
determining whether any of that payment may be applied to the
satisfaction of a money judgment.

SEC. 8.  

Section 704.165 is added to the Code of Civil
Procedure, to read:

704.165.  

(a) Except as provided in Article 5 (commencing
with Section 708.410) of Chapter 6, a cause of action arising out
of or regarding the violation of any law relating to the judgment
debtor’s employment is exempt without making a claim.

(b) An award of damages from or a settlement arising out of or
regarding the violation of any law relating to the judgment debtor’s
employment is exempt to the extent necessary for the support of
the judgment debtor and the spouse and dependents of the judgment
debtor.

SEC. 9.  

Section 704.720 of the Code of Civil Procedure is
amended to read:

704.720.  

(a) A homestead is exempt from sale under this
division to the extent provided in Section 704.800.

(b) If a homestead is sold under this division or is damaged or
destroyed or is acquired for public use, the proceeds of sale or of
insurance or other indemnification for damage or destruction of
the homestead or the proceeds received as compensation for a
homestead acquired for public use are exempt in the amount of
the homestead exemption provided in Section 704.730.

(c) If the judgment debtor and spouse of the judgment debtor
reside in separate homesteads, only the homestead of one of the
spouses is exempt and only the proceeds of the exempt homestead
are exempt.

(d) If a judgment debtor is not currently residing in the
homestead, but his or her separated or former spouse continues to
reside in or exercise control over possession of the homestead, that
judgment debtor continues to be entitled to an exemption under
this article until entry of judgment or other legally enforceable
agreement dividing the community property between the judgment
debtor and the separated or former spouse, or until a later time
period as specified by court order. Nothing in this subdivision shall
entitle the judgment debtor to more than one exempt homestead.
Notwithstanding subdivision (d) of Section 704.710, for purposes
of this article, “spouse” may include a separated or former spouse
consistent with this subdivision.

SEC. 10.  

Section 704.730 of the Code of Civil Procedure is
amended to read:

704.730.  

(a) (1) Except as provided in paragraph (2), the
amount of the homestead exemption shall not exceed begin delete $700,000 end delete
begin insert seven hundred thousand dollars ($700,000) end insert .

(2) If a homestead is no greater than 320 acres and is primarily
used for agricultural purposes, the homestead exemption is
unlimited.

(b) Notwithstanding any other provision of this section, the
combined homestead exemptions of spouses on the same judgment
shall not exceed the amount specified in subdivision (a), regardless
of whether the spouses are jointly obligated on the judgment and
regardless of whether the homestead consists of community or
separate property or both. Notwithstanding any other provision of
this article, if both spouses are entitled to a homestead exemption,
the exemption of proceeds of the homestead shall be apportioned
between the spouses on the basis of their proportionate interests
in the homestead.

SEC. 11.  

Section 704.960 of the Code of Civil Procedure is
amended to read:

704.960.  

If a declared homestead is voluntarily sold, the
proceeds of sale are exempt in the amount provided by Section
704.730.