California exemptions: 704 vs. 703

California is one of a small number of states where you can pick which exemption system to use. The choice is made once, at filing, and applies to your whole case — you cannot mix System 1 and System 2.

System 1 (Cal. CCP §704) has a very generous homestead exemption that protects most home equity for working-class California homeowners. It is the right system for filers who own real estate they want to keep.

System 2 (Cal. CCP §703.140) is modeled on the federal exemption set. Its homestead is small, but it includes a "wildcard" exemption that can protect cash, jewelry, or any other property you choose. It is usually the right system for renters or for anyone with very little home equity.

Fresh Slate users are renters by qualifier design, so System 2 is almost always the right choice. The attorney review confirms this before filing.

System 1 is built around the homestead. The 2021 amendment to §704.730 set the homestead at the greater of $313,200 or the county median sale price of a single-family home in the prior calendar year, capped at $626,400 — both adjusted annually for inflation. That makes it one of the most generous homestead exemptions in the country.

System 2's tiny homestead is a feature, not a bug — most filers who use System 2 don't have home equity to protect, so the small homestead doesn't matter. What matters is the wildcard: you can apply roughly $35,000 of unused homestead protection to literally any other property. That covers savings accounts, jewelry, second cars, tools, anything.

During the Fresh Slate attorney review, Eugenio runs the math both ways using your actual asset list — bank balances, car value, retirement accounts, anything else of value — and picks the system that protects more. The output is shown on your final petition before you sign off.

For a typical Fresh Slate filer — single, renting, with a paid-off car, some retirement, and a few thousand in checking — System 2 wins almost every time. The wildcard covers the checking balance and any miscellaneous property; the vehicle exemption ($7,500) covers most paid-off cars; ERISA accounts are fully protected regardless. The few thousand dollars of difference between the two systems usually goes to the wildcard.