I am 79 years old. I have to file bankruptcy soon because I personally guaranteed my grandson's loan and he defaulted on the loan. The collection agency for the creditor is now suing both the boy and me, but the boy doesn't have any assets. My husband and I have a house with a lot of equity, but my husband doesn't have any debt except the small mortgage on our home. I've been doing some reading online, and this is my question. Since I'm over 65 years old, do I get that $175,000 senior citizen exemption I keep reading about even though my husband isn't filing bankruptcy with me, or am I limited to the $75,000 individual exemption? I've met with 3 different lawyers and got 2 different answers. They both seemed to know what they are talking about. I'm confused. Help! Thank you.
You get the $175,000 exemption whether he files with you or not; but why not include him?
If you don't, he will continue to be responsible for any joint debts you may have along with any of his own debts although your community home will continue to be protected.
You get the full $175,000 according to CCP §704.710. You may exempt $175,000 if you are 65 or older, or physically or mentally disabled; $175,000 if 55 or older, single, and earn a gross annual income under $15,000 or are married and earn a gross annual income under $20,000 and creditors seek to force the sale of your home. If you are married but separated, you may claim the homestead exemption in community property occupied by your spouse. Unless your home equity exceeds $175,000, you may not need to file BK. Just record a Homestead Declaration with the County Recorder where you live. That will not stop the collection agency from suing you, but it will prevent them from selling your home. If you decide to file BK later, you can file a motion to avoid any lien they recorded against your property. If you decide to file now, that will terminate any lawsuit planned by the collection agency. Contact me for a free consultation if you still have questions.
I agree with my colleagues that you are entitled to the full $175,000 exemption whether you file jointly or separately. I write only to point out that if the loan you guaranteed is a student loan your bankruptcy petition will not discharge the debt unless you are able to obtain a discharge of it due to extreme hardship. You may wish to reconsider in that circumstance.
A lawyer who handles bankruptcy regularly would not make the mistake of giving you different advice than you received here. Consult and retain a lawyer who regularly handles bankruptcy. You can use the “Find a Lawyer” function here on Avvo to locate such a lawyer. I believe you can also locate certified consumer bankruptcy specialists through the CA State Bar website. Good luck.
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Chapter 7 Bankruptcy Attorney
You are entitled to the full $175,000.00 exemption, with or without your husband. Remember though, when you use this exemption, you may only use the remaining CCP 704 exemptions to exempt your other property. Thus, it is important to make sure you analyse what other properties you have, and how they fit under the other 704 exemptions. It is important to further analyse whether it is better to file with or without your husband. A competent attorney can accomplish this for you during their initial consultation - which is generally free. It is also important to make sure the debt you guaranteed is of a dischargeable nature and not secured against property you own. Again, a competent attorney should be able to help you with this issue during a free consultation. Lastly, if you get two answers from two attorneys, do not be afraid to see a third or even fourth attorney. It is always better to get the right information up front - before you file for bankruptcy.
Chapter 7 Bankruptcy Attorney
You do not say what the defaulted loan balance is. I agree with the other attorneys that you are entitled to the $175,000 homestead exemption. You may want to record a homestead declaration and make a settlement offer to the creditor. Consult with an experienced bankruptcy attorney who can properly advise you as to whether you are "judgment proof". You may want to make a settlement offer to the creditor to avoid having to file a bankruptcy. The attorney should be able to help you with that also.
Nothing in this response should be construed as legal advice, or establishing an attorney-client relationship.