Tools of the trade · Beverly Hills
The Tools of the Trade Exemption
The tools of the trade exemption protects up to $10,950 of the tools and equipment you need to earn a living, under either California system. Under System 1 that can include a commercial vehicle, up to $4,850 (amount effective April 1, 2025). Under System 1, spouses in the same trade can protect up to $21,900. Call (310) 362-9071 and we will check what your work equipment is worth.
- System 1: CCP 704.060. System 2: CCP 703.140(b)(6)
- $10,950 in either system (since April 1, 2025)
- System 1 limits a commercial motor vehicle to $4,850 of that
- The items must be used in your current work
At a glance
What the exemption covers
The tools of the trade exemption covers property you actually use to earn a living. Under System 1, CCP 704.060 lists tools, implements, instruments, materials, uniforms, furnishings, books, equipment, a commercial motor vehicle, a vessel and other personal property that is reasonably necessary to your trade, business or profession.
The key words are "reasonably necessary" and your current work. A set of carpentry tools counts if you work as a carpenter. The same tools stored in the garage for weekend projects usually do not.
Items people often claim include hand and power tools, a laptop and software used for work, professional books, salon or kitchen equipment, a work trailer and job-site gear.
Like other exemptions, it protects equity. If you owe a lender on a piece of equipment, only the value above the loan needs protection. Values are measured on the day you file.
Amounts by system
| Situation | System 1 (CCP 704.060) | System 2 (CCP 703.140(b)(6)) |
|---|---|---|
| One person in the trade | $10,950 total, with a commercial motor vehicle limited to $4,850 | $10,950 |
| Both spouses in the same trade | $21,900 total, with a commercial motor vehicle limited to $9,700 | Ask us |
| Extra protection from a wildcard | None | $1,950 plus any unused home amount, up to $38,700 |
All amounts are effective April 1, 2025. Under System 2, the wildcard exemption can cover equipment worth more than the tools limit. In either system, a work truck can instead be protected by the motor vehicle exemption, which is a separate $8,625. The right mix depends on everything else you own. See our System 1 vs System 2 comparison.
Examples for common trades
- Contractor. Power tools, ladders, a trailer and a pickup used on job sites. The tools and trailer can go under the tools exemption. The pickup may fit better under the motor vehicle exemption, saving the tools amount for equipment.
- Hair stylist. Shears, dryers, flat irons, a styling chair and kits. These are usually well within the limit at used values. Product you sell to clients is inventory, which is treated differently.
- Rideshare or delivery driver. Your car is your main tool. It is usually claimed under the motor vehicle exemption. Whether part of it can also go under tools of the trade depends on the facts and the system.
- Photographer or videographer. Cameras, lenses, lights and editing equipment. Used camera gear can still be worth a lot, so we value it carefully.
If you own a business entity, such as a corporation or LLC, the equipment may belong to the company, not to you. That changes the analysis. See our page on business bankruptcy in Beverly Hills.
Tools of the trade mistakes to avoid
- Claiming hobby equipment. The items must be used in your current work.
- Using replacement cost. Value is what the used item would sell for, not what a new one costs.
- Forgetting the vehicle sub-limit. Under System 1, a commercial vehicle counts only up to $4,850 (or $9,700 for spouses in the same trade) within the tools limit.
- Treating inventory as tools. Goods you sell are not tools of the trade.
- Selling equipment before filing. Selling work tools for cash right before filing can turn protected property into cash that may not be protected.
What it costs
- Chapter 7: flat attorney fee from $1,200, plus the $338 court filing fee
- Chapter 13: attorney fee quoted in writing, and part of it can be paid through the plan
- Payment plans are available, and the first consultation is free
More on what you keep
- California bankruptcy exemptions: what you keep
- California Exemptions: System 1 vs System 2
- The California Homestead Exemption and How Yours Is Figured
- The California Motor Vehicle Exemption
- The Wildcard Exemption Under CCP 703.140(b)(5)
- Retirement Accounts, 401(k)s and Pensions in Bankruptcy
- The Tools of the Trade Exemption
- Household Goods, Jewelry and Personal Property
- Wages, Tax Refunds and Cash on Filing Day
Tools of the trade questions
How much is the California tools of the trade exemption?
The California tools of the trade exemption is $10,950 under either System 1 or System 2 (effective April 1, 2025). Under System 1, spouses in the same trade can protect up to $21,900.
Does the tools of the trade exemption cover my work truck?
Yes, the tools of the trade exemption can cover a work truck. Under System 1, a commercial motor vehicle counts only up to $4,850 of the tools limit. The motor vehicle exemption may protect it better.
What if my equipment is worth more than the limit?
If your equipment is worth more than the limit, the System 2 wildcard may cover the rest. If not, Chapter 13 can let you keep it while paying creditors its extra value over time.
Do I have to be self-employed to use it?
No, you do not have to be self-employed to use the tools of the trade exemption. Employees who own their own tools, like mechanics, can claim it too. Read more in our guide to what you keep in bankruptcy.
Free consultation
Keep the tools that pay your bills
Call (310) 362-9071 or send the form. Bring a list of your work equipment and we will check how it is protected.
Law Offices of John Asuncion9454 Wilshire Blvd., Penthouse Floor
Beverly Hills, CA 90212
(310) 362-9071
Monday to Friday, 9 a.m. to 6 p.m.