Exemption Questions - Need Help/Advice

[OweTooMuch]

My house is underwater by about $100,000 (first and second mortgages). I am thinking about filing Chapter 7 as I also have $35,000 in credit card bills addition to being underwater on mortgage. My husband is not listed on any of the bills at all so he is not going to file.

• Since my house is underwater then I can exempt up to $20,000 in assets?
• How are the exemptions valued if he is on title of assets?
• Do I need to claim his separately titled car if it was acquired during the marriage?
• If he does not file then all of his pre-marriage assets like tools of the trade do not come into play right?

He may be losing his job in February. We are fighting every day over bills (his pay has decreased greatly) and things are gettting extremely tight and we can't pay all the bills. We have talked about separating as he wants to move to a different area and I cannot sell my house right now.

I think the housing market may come back but I do want to move my kids to a better neighborhood/schools.

Would I be better off walking away and then trying to claim insolvency? I think once the house is gone it will be hard to claim this with the IRS.

Any thoughts/advice?

[StartingOver08]

Is the house in your name only or in both names (deed)?
Is the mortgage in your name only or both names?

If you file BK and surrender the house you will not have to worry about a deficiency notice or a 1099 from the lender. Also, you will be able to stay rent free until the final sale. Have you interviewed any attorney's yet for the BK?

[OweTooMuch]

Hi - The deed (1st & 2nd) is in my name only as well as both mortgages. I had the house over 10 years before I met him. I did need him to file a quit claim after I took out the 2nd after we got married and he did.

I just feel bad as I have lived here for a long time and never thought this would happen. I have not interviewed any attorneys yet. Still running the numbers to make sure this is the best option. At this time it is starting to look like it is.

[StartingOver08]

California has some pretty generous exemptions. Take a look here http://www.legalconsumer.com/bankrup...ame=California

There are two systems in CA, System 1 and System 2, you need to choose which is best for your specific situation as they do have different exemptions.

Some of the CA filers here have more experience and can provide more detail for you.

[justbroke]

If you're surrendering your home, then System 2 will provide about $21K in exemptions! Very nice to live in California.

In addition, even though your Chapter 7 would discharge any deficiency, California is a non-resource State if the loans are purchase money loans used to purchase your home.

[StartingOver08]

If you're surrendering your home, then System 2 will provide about $21K in exemptions! Very nice to live in California.

In addition, even though your Chapter 7 would discharge any deficiency, California is a non-resource State if the loans are purchase money loans used to purchase your home.

I hesitate to mention this because so many people refinanced during the boom years so their loans are not PMM.

[OweTooMuch]

Yes I did refinance so they don't qualify as PMM. If I don't surrender my home and there is no equity in it at all then do I still get the $21,000 in exemptions?

[justbroke]

Yes I did refinance so they don't qualify as PMM. If I don't surrender my home and there is no equity in it at all then do I still get the $21,000 in exemptions?

Yes.

California 703.140(b)(1)...

Any unused portion of this amount can be applied to any property.

[OweTooMuch]

Thank you StartingOver08 and JustBroke for your help. I am reading up on the exemptions now.