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If the only non-exempt asset for m chapter 7 case is a house, does the chapter trustee get paid before or after my exemption?

Corona, CA |

I filed the case myself.

The trustee put my home for sale. The only lien to be paid is the amount owed the bank ($650,000). There is an offer for $850,000.

Trustee agrees my homestead exemption is $150,000.

After sales commission and costs, there seems to be an equity of $200,000.

Does the trustee normally get paid before my homestead of after?

The trustee says I must reduce my homestead exemption to about half ($75,000) or she will not sell the property.

Do I have to do this? It seems like the trustee is putting her interest before mine.

Is there anything I can do?

I don't find any attorneys who will take a contingency for pay.

Attorney Answers 6


  1. If you want the trustee to sell the property for you, you'll have to agree to waive part of the exemption so that it's worthwhile to the trustee. What I don't understand is why you're willing to let this happen when you could pocket a $200,000 profit by selling to the same buyer after your case is over with.


  2. Something is not adding up here. I see several issues. Remember that the trustee is most definitely NOT on your side and should not act in your best interest. They are acting in the best interest of your unsecured creditors.
    Based on the limited facts you've provided, it sounds like you can avoid having the home sold altogether and look to do so on your own after the bankruptcy and AFTER your unsecured debts have been discharged.

    This is a delicate situation, and you MUST speak with an attorney in your area immediately. My colleague is exactly right. This seems to be a very inefficient way to sell your home and eliminate debt. I'd be happy to speak with you if you have questions.

    Brian C. Fenn <b><a href="http://www.fennlawfirm.com">FENN LAW FIRM</a></b> 29222 Rancho Viejo Rd. Ste. 102 San Juan Capistrano, CA 92675 Tel/Fax: (800) 994-9079 brian@fennlawfirm.com


  3. The homestead exemption gets paid to you first. Why would you even consider reducing your claimed homestead exemption at all????? If the trustee found a buyer for your home for $850000 then you should be able to as well once your bankruptcy case is discharged and closed. There must be other facts or issues that you are not stating here, or your question does not make much sense.
    Please consult with an attorney.


  4. Bankruptcy attorneys generally do not take cases on contingency. Most Bankruptcy attorneys will take your case for a flat fee and handle everything for you. The trustee is compensated based on a percentage of the money she distributes to creditors. The more money she distributes the more she makes. The trustee represents the bankruptcy estate and not you. The trustee does not have your best interest in mind. The trustee is obligated to do whatever she can to get the creditors the most money. If the trustee wants you to change your objections she should file a objection to them and take it in front of the judge. If you want to save your home you should probably be in a Chapter 13. Even if you change your exemption to $75,000 the trustee is required to pay you this first as a lump sum so it may be in your best interest to amend you exemptions and take the money which is considered post peition income and will not be touched by your creditors. You will come out of the bankruptcy debt free and with $75,000 to put down on a new house at todays prices.


  5. The trustee is not your friend and is representing the interests of your creditors. I cannot imagine why you would even consider reducing your claimed exemption just to help the creditor. This is your money and you should be able to keep it.

    You need representation right away. The National Association of Consumer Bankruptcy Attorneys has qualified members In your area that can help you.

    First, the firm is a debt relief agency according to the U.S. Bankruptcy Code. We help people file for bankruptcy. We also do other stuff and we do it well, but Congress wants me to post this notice. Second, nothing on this site is legal advice. You are not my client unless you enter into a written agreement signed by you and me.


  6. Clarify:

    Why is the Trustee agreeing that your homestead exemption is $150,000, but is telling you to reduce it to $75,000 or they will not sell the property. This does not make sense.

    BW

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