Relocation issue

[Liz]

Hello all....I need some clarification that I hope you all can help me with.

Unfortunately, I am in a position wherein I will have to file bankruptcy at some point this year. I recently (last month) moved from FL to GA, however we had owned our home in GA since August 2006.

For homestead exemption purposes, my understanding is that I would fall under FL bankruptcy laws if I file within 2 years of having moved to GA, from FL correct? Reason I ask is because FL's homestead exemption is great, whereas GA's is very very low...I think like $10,000 of equity is exempt for single filers and $20k for joint, and FL is unlimited from what I remember.

Thanks in advance for your help!

[FreshLikeADaisy]

Liz, the way the law is written is kind of bizarre: if you have not lived in the state you are filing in for at least two years, then you have to use the exemptions of the state where you spent the greater part of the six months prior to two years ago.

Hypothetically, if you filed today, February 2, 2008, you would use the exemptions of the state where you lived for the greater part of the six months immediately prior to February 2, 2006. If that's FL, you're golden. But if you lived in another state during that time as well, it gets kind of tricky.

Your alternative is to file immediately in FL, which you have the legal right to do, but then you get into trying to homestead a property that is not located in the state you are filing in, which is also tricky. But if you file in GA, and the property is in GA, and you use FL exemptions, it's not a problem at all because the house is located in the same state you're filing in.

So your best bet may be to wait 91 days from the day you moved to GA (again, the greater part of 180 days) and file in GA, using the appropriate state's objections. You didn't say whether you lived steadily in FL until you moved to GA, which is why I have to stop short of agreeing that you should use Florida's exemptions.

Good luck!!!

[Liz]

Thank you for your response!
I lived in FL up until last month, however my husband got his GA's driver's license back in June 2007 (to establish residency so that his daughter would be classified as a GA resident for college tuition purposes)....so if we waited until the latter part of this year to file, we would still be ok in having to use FL's exemptions, correct? Since we will have to file joint, what date would be used for the 2 year residency period, mine or his?
We don't have a ton of equity in our home here in GA, but it is more than the $20k GA exemption offers. We do qualify for a Chapter 7, and we of course, want to keep our home.
Thanks again for your help! This is an awesome forum!

[FreshLikeADaisy]

Sounds like a plan. Good luck to you!!!

[diviaruba]

Not so fast...

See this thread:

http://www.bkforum.com/showthread.php?t=19869&highlight=schultz

[FreshLikeADaisy]

Thanks for posting the case law, DiviAruba.

Am I understanding this correctly, to mean that no ex-resident of Florida can use Florida's state exemptions?

Interested in hearing more from you, DiviAruba. Good catch!!!!

[Liz]

Thanks for the info! Although it's not what I'd like to hear because it sucks for me...maybe! I looked up the federal exemptions on homestead and it says that the exemption is $20,200, but can be doubled if filing jointly, which we intend to do. I may be close...we put 10% down on our home when we purchased it in August 2006. At that time, because we wanted to keep our payments on the lower end, we went with a 10/1 ARM for our first mortgage and 15 year balloon second mortgage (amortized for 30 yrs).
We recently (in December) refinanced our first mortgage to a fixed 30 year because we knew that we would eventually have to file bankruptcy and what with the volatile market, we did not want to run into any surprises or problems with refinacing 8 1/2 years down the line, so we decided to straight refinance now, no cash out.
We were surprised to learn that even with the way the market is right now, our house actually appraised for about $37k more than what we bought it for!
Unfortunately, using the last appraisal from the refinance, this would put us at about $70,000 in equity.
Keeping in mind that we probably will not file until later this year, or the beginning of next year, will we have to have another appraisal done at the time of filing or would they possibly use the purchase price? If the purchase price was used, we would be ok.

How is value determined? I doubt that the Trustee just takes your word for it...right?

[FreshLikeADaisy]

Just a couple of points...

Because the market is changing so rapidly, you will want an appraisal -- even an informal one -- nearer the time you file. If your trustee wants another, he can ask, but it's very good to walk in with at least an informal appraisal in your hand, esp since some online sites tend to overvalue houses. By "informal" I mean you get your realtor friend to do a walkthrough and send you a letter stating, "This is what I think your house is worth." You could also spend the money on an actual appraisal. But if you try to rely on your purchase price, you're taking a chance that the trustee won't like it and use his own figures, which may not be so friendly.

It's hard to say whether or not the trustee will just take your word for it, but in this market, chances are no. And they do have ways of "appraising" your home based on internet sites that combine all sorts of MLS data and tax records, etc to come up with a figure.

However, for everything but homestead, federal exemptions are MUCH more generous than Florida's. I can't remember if there are wildcard exemptions for federal, or any exemptions which, if unused, become wildcard, but if there are you can use those to exempt your equity as well.

Good luck!!!!

[BIGA]

What if you have been living away from the US and feel like you have to return home to decare BKK? How is that handled? Can you move back to any state and declare or is by your home of record for tax purposes?

[lrprn]

What if you have been living away from the US and feel like you have to return home to decare BKK? How is that handled? Can you move back to any state and declare or is by your home of record for tax purposes?

The current bk law requires you to be in a state for two years to use its exemptions. However, you can still file after being in a state long enough to meet its residency requirement.

Most of the time in this situation where you've been abroad for some time, the filer is allowed to use the federal exemptions. However, you need to confirm this with a bk lawyer who is well-experienced in the local court where you file to make certain this will be the case for you.