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.
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.
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Chapter 7 Bankruptcy Attorney
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.
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Chapter 7 Bankruptcy Attorney
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.
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.
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