If my house is work $525k and I have $400k loan, can judge force me to sell home to pay $25k to injured? In CA the homestead exemption is only $100k for married couple. I might have to file for chap 13 bankruptcy
In order for a judgment creditor to be able to force the sale of your home, they would need to show the sale of the home would (1) be sufficient to pay off the liens with higher priority; (2) pay the entire homestead exemption to the debtor; (3) pay the costs of sale; and (4) pay money to the judgment creditor. At auction, you would be unlikely to get fair market value for the home and the costs of sale would be several thousand dollars. While possible, a forced sale is unlikely.
Now before they get a judgment, they have to sue you and get a judgment. if you have insurance coverage, the case would probably settle a long time before you were put at risk of losing your home. However, you might still want to consult with a bankruptcy attorney if you have other debt issues.
You also should consider the cost of sale, which runs about 7% of the sale price of the home. Even though in your scenario it wouldn't bring the value down below the 100k homestead, it makes selling the house look a little more unattractive. (*However, I have known some Trustees to sell homes without a real estate agent, eliminating this cost of sale--so be careful.) Also, the real estate market is on the up-swing so if you're going to pull the trigger on a bankruptcy, you should try to do it sooner than later.
Are either you or your spouse over the age of 65, or disable, or over age 55 with "low income"? If so, then you're eligible to take a $175,000 homestead. Check with an attorney if you're over age 55 and you believe you qualify for the "low income" classification.
If you end up filing a Chapter 13, you don't need to worry about anyone selling your home. You can keep it, but you're making payments over the course of a 3 or 5 year Chapter 13 payment plan.
People who have significant equity in their assets should never carry minimum limits liability coverage. While I agree with my colleagues that it is unlikely that a judgment creditor would be able to force the sale of your home at present based on your current situation, and with the caveat that I am not licensed to practice in CA and have no idea of how long judgments remain viable there, where I practice judgments are good for 10 years and can be renewed for an additional 10 years just by filing some paperwork and paying a new filing fee. You may not have much equity now but you may in 5 or 10 years have enough equity to make it worthwhile for a judgment creditor to come after you. I strongly suggest you consult with an attorney to see how long you may be on the hook for the judgment and I also suggest that you see your insurance agent to make sure you have enough coverage to protect your property. Coverage above minimum limits usually does not cost that much more than minimum limits coverage and does a much better job at protecting you.
In the end, you should consider all of your options. Bankruptcy is one of your options, but debt settlement is another. A debt settlement attorney will negotiate for large reductions in your debts (principal & interest) allowing you to settle the debts permanently for a fraction of the balance. It does not matter if you are facing collection or a lawsuit. This is an alternative to bankruptcy.
For more information and a comparison between bankruptcy and debt settlement, see here: http://www.debtsettlement-ca.com/debt-settlemen...