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How is the homestead exemption applied to equity when there is joint tenancy ownership of property in Chapter 13 bankruptcy?

Los Angeles, CA |

My mother and I own our residence as joint tenants. It has about $150,000 equity total. In Cal. my exemption would be $75,000. Will I be able to exempt all my equity or will my mom's equity be applied towards me?

Attorney Answers 2


You would list your 1/2 interest in the property ($75,000 equity) and exempt it with your homestead exemption. (This cannot be done with community property, by the way.) Don't forget, you would not have any other exemptions to exempt cash, checking/savings, investments, vehicle equity over $2,725. What you are not able to exempt you would have to pay to your unsecured creditors over the life of your Ch13 Plan.

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50% of the fair market value of the residence would be accounted for as part of your bankruptcy estate. So, subtracting the debt would mean you would show your interest as 50% of the equity. When calculating the equity, however, remember that the court will look at the fair market value of the property and then subtract 8% representing the costs and commissions that would be incurred in a hypothetical sale. Your interest that you would need to exempt would then be 50% of the remaining amount, which may actually end up being less than the $75,000 you have stated. Given the figures you state, you should not have any problem applying the homestead exemption to fully protect that amount.

I would suggest, however, that you arrange for a consultation with a local bankruptcy attorney (many will offer a free initial consutation) to review your entire financial situation and to determine if a Chapter 13 is the best for you or if you might be better off in a Chapter 7. The attorney can review all of your assets, their values, your income & expenses, available property exemptions, and advise you on the best approach for your situation.

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