Skip to main content

2 people on condo title, only one files for bankruptcy, me. D do I need to use my Homestead exemption to protect my equity, or ?

Fort Lauderdale, FL |

I am trying to take advantage of the additional 4K exemption allowed to keep other personal property, (like my car, which has too much equity) when I file for bankruptcy. Do I need my Homestead exemption to protect our home equity from debtors to put a lien on our home, if my son is on the title too ever since we've purchased the condo together a year ago? Or, since he is on the title too, they cannot foreclose or pur a lien on the home, which is seller financed and we are current on the mortgage payments, plan to keep the condo.

Attorney Answers 6

Posted

This comes up a lot. Technically speaking, the trustee could sell your half interest in the home if you do not claim it as exempt. However, not many would be interested buyers, if any. The buyer would be a partner of sorts with your son, and if your son said to them "sorry, this is my homestead and I'm not budging and if you step foot on this property I'll have you arrested for trespassing" he would be within his rights. Who wants that headache? The buyer would have little choice but to proceed with an expensive action in partition to force a sale of the home. What's your half of the likely equity? You only bought it last year. If you put little down, then foregoing the homestead exemption in order to use the $4T is a possibility. Risks, risks, risks. There are always risks.

The law is complicated and although the facts expressed may seem to be all that is relevant, there may be many other important facts to consider. Also, the law is constantly undergoing change, so what may be correct today, may not be accurate tomorrow. Only a full consultation with an attorney experienced or knowledgeable in the specific legal subject matter is likely to result in the optimal course of action. My practice has entailed more than a 30 year span of many real estate issues. Find out more about me at: FloridaPropertyLitigation.com.

Mark as helpful

1 found this helpful

6 lawyers agree

4 comments

Asker

Posted

Mr Russo! You are hired! I like your way of thinking... will deifinitely get in contact ... We put down 30K at purchase a year ago, + whatever was paid into principal in the past 11 months = our Equity in the condo

Rex Edward Russo

Rex Edward Russo

Posted

Thank you. You paid nearly all interest the past year, and the market has done much if anything, and when you discount for all the closing costs, the end result is exceedingly little or no equity. So it will work! Call my assistant Lissette to schedule an appointment: 305-442-7393

Asker

Posted

I don't have your email addr, but would 12 noon work for you tomorrow?

Rex Edward Russo

Rex Edward Russo

Posted

Yes. Email: rexlawyer@prodigy.net. see more about me at Website: FloridaPropertyLitigation.com

Posted

Unless your equity in the property is very small & you don't mind paying your bankruptcy trustee for your equity position, claim the exemption.

Hope this perspective helps!

Mark as helpful

8 lawyers agree

2 comments

Asker

Posted

oh, no, it is 30K equity, so are you saying that even though there i another peron on the title who is not involved in the bankruptcy, the trustee could foreclose on it?

Dorothy G Bunce

Dorothy G Bunce

Posted

The trustee could seize & sell your equity. Foreclosure is something only a lender or lienholder can do. Better get legal representation right away on this matter.

Posted

As a Broward County attorney, I can tell you that there is a possibility the trustee will try to sell your home to an investor if you do not claim the homestead. A full discussion would be needed to evaluate your situation. Your goal to obtain the benefit of the extra $4,000 could work, but you should be aware of the risks.

The questions and answers posted on AVVO are for general information and should not be treated as legal advice or establishing an attorney-client relationship.

Mark as helpful

7 lawyers agree

Posted

While your own attorney can advise you because he will know all of the facts. It is usually advisable to assert the Homestead Exemptions. I would be very reluctant to not protect my equity.

Mark as helpful

3 found this helpful

8 lawyers agree

Posted

I have to agree with my colleagues, but would like to add that it's going to be in your best interest to consult an experienced attorney to assist with your filing. A local attorney is going to know your area's bankruptcy system and can more accurately give you the scenarios that commonly come up regarding this issue. In the Middle District of Florida, this issue really depends on which trustee is assigned to the case. Some of them will sell a non-exempt property if the homestead is not claimed, while others do not. Paying an attorney to file this for you could also save you more than what you could potentially pay by filing on your own because an attorney will help you accurately assess values of your assets. From your description, it sounds like asset values are going to be important.

Mark as helpful

7 lawyers agree

Posted

If you have equity in your home (where you live), you must claim it as exempt or the Trustee will use the strong arm powers provided by the Bankruptcy Code to sell the property. The Trustee can try to sell the entire property (see 11 USC 363(h)). I respectfully disagree with the opinion that the Trustee or the Trustee's buyer would have to be "partners" with your son, and that you son could intimidate them with threats of trespass.

The practical reality is that attempting to save the additional $4,000 in personal property exemptions could well backfire and cost you much more than that in attorney fees or payments to the Trustee for other reasons.

If you can't afford to work out a deal with the Chapter 7 Trustee without claiming the additional exemptions, a Chapter 13 might be a better option for you. The aggressive nature of today's Chapter 7 Trustees is causing many debtors to file 13s that easily would have been 7s just 4 or 5 years ago.

If you are thinking of trying to do this bankruptcy without an attorney, you are flirting with disaster. A good attorney that has been concentrating his/her practice in consumer for at least 10 years is well worth his/her fees. Be very cautious in selecting your attorney. Do not choose an attorney that was practicing real estate law before the boom, and only starting filing bankruptcies because there was no more real estate work.

Good Luck.

JWS

Mark as helpful

5 lawyers agree

1 comment

Rex Edward Russo

Rex Edward Russo

Posted

Jim, With the exception of the part where you state: " I respectfully disagree with the opinion that the Trustee or the Trustee's buyer would have to be "partners" with your son, and that you son could intimidate them with threats of trespass," I agree with you. My exception is based on the fact that I never mentioned the trustee, but rather a perceived buyer of the 1/2 interest then acting under state law. It's never a good idea to threaten a trustee, but no trustee is going to try to take possession or control of the property absent an action pursuant to 11 USC 363(h). That provision of the Bankruptcy Code states in part that the trustee would be able to also sell the 1/2 owned by the non-debtor, "only if - (3) the benefit to the estate ... outweighs the detriment to the co-owner." That brings up a lot of issues that run far deeper than any discussion that out to be played out in these posts, and the case law I know of is on both sides (call me if you want the citations). But, I fully appreciate your position and cautioning those reading this. That is why I did not say in my original post that foregoing the homestead exemption in order to use the $4T should be done, but simply that it was a possibility. As I stated before, and you underlined: "Risks, risks, risks. There are always risks." Sometimes issues need to be pressed, but we all need to know when to hold them, and when to fold them. I have been successful in the past in at least one case with a similar scenario. In that case the trustee apparently saw it as more bother than it was worth and took no negative action.

Bankruptcy and debt topics

Top tips from attorneys

What others are asking

Can't find what you're looking for?

Post a free question on our public forum.

Ask a Question

- or -

Search for lawyers by reviews and ratings.

Find a Lawyer

Browse all legal topics