Chapter 7 - Inheritance Question

[tanya0090]

Hello!

Well, I am considering filing Chapter 7. My father recently passed and willed his home to me - the home has a mortgage with a $17,000 balance. The home is in terrible shape. I contacted a real estate agent about selling it and after viewing the home and the area I was told that I MAY break even IF it sold.

Well, I hate the idea of losing the home if there is anyway to save it. So in researching chapter 7 (which I intended to file 7 or 13 anyway) I'm wondering if the exemptions in Alabama would help me at all. I am married and we would be filing jointly. The home is not our primary residence. Does anyone have any idea how this all could play out?

[leonel9]

First of all, sorry to hear about your father's passing.

I don't have an immediate suggestion, but it may help if we had a better understanding of your situation:

• Do you own your primary residence?
• What do you want to do with the property you inherited, rent it out? If that's the case, are there repairs that need to be done to bring it to a rent able condition? If you were to get a loan for the repairs, would the equity no longer be a concern?
• Would you consider living in the house your inherited?
• Did the agent tell you how much the house is worth? This amount minus $17k is the equity that's in question.
• You mentioned you were considering CH7 or CH13. Is there a reason you were considering CH13 (e.g. in order to retain property)?

In Alabama it appears that you must use state exemptions, and have a $15k homestead exemption, doubled if you are married, and a $7,500 wildcard exemption, doubled if married. Keep in mind I am not an attorney, and I'm assuming you can use the wildcard exemption toward 2nd homes. The text reads as a wildcard toward personal property, not real property, so this is questionable. Before doing anything (e.g. getting an loan to make repairs), I would discuss this situation with a few Alabama bankruptcy attorneys. Many offer initial consultations for free.