Effective January 1, 2010, the California homestead exemption protecting a homeowner’s equity from a judgment creditor (or bankruptcy) will be increased by $25,000 as follows:

1. $75,000 for individuals,
2. $100,000 for married couples, and
3. $175,000 for individuals who are age 65 or older, disabled, or age 55 older with a limited income as specified.

How the Homestead Exemption Works in a Nutshell. If a judgment creditor is able to collect against your personal residence by placing your home up for auction, after the home sells the first person to be paid is the home owner's mortgage lender. The second person to be paid is the homeowner (the amount of the homestead exemption). It is only after both the mortgage lender and the home owner have been paid, that a judgment creditor will be entitled to any remaining equity. Consequently, a judge will be ill disposed to allow a judgment creditor to foreclose on a home unless there is credible proof that the home has sufficient equity not only to pay off the mortgage lender, but also the amount of the home owner's exemption and all of the fees and expenses attendant to such a sale.