My "homes" and bankruptcy

[gunnagtthr]

I guess my situation could be called a mess, but I suppose anything leading to bankruptcy is a mess.

Here is my situation: I had a nasty end to a relationship last year, which is what led to completely bankrupting me.

We owned a house together, and that person is living in the house and making the payments, which are current. I don't want to lose the house, and my attorney is pretty sure there is not a risk of that with the payments being current. He said the main impact with the bankruptcy is that if she ever walks away from it, they won't come after me (basically). I am not sure if my bankruptcy will effect her credit or anything else. Do you? The equity in it is about $70k. If I understand everything correctly, I am allowed $60k in house equity, which my half in this house is $35k, so it should be exempt from the ch. 7, correct?

Next situation - my daughter was fortunate enough to buy a little townhouse about 6 years ago. At the time, she didn't have credit so my name, and my ex's is on the loan, and my daughter and the two of us are on the title. I have never made a payment, and my daughter and roommates have all pmts current. Same situation with her house. Is she in jeopardy since I am declaring bankruptcy? The equity in hers may be a total of $20k, if that.

Any advice on not getting totally depressed over all of this? Other than those two homes, I really have no equity or assets (other than personal belongings and car - which falls below the $5k allowance for vehicles) anywhere.

[doni49]

Can a homestead exemption even be applied to someone else's residence? Both properties sound like they'd be classified as property you currently possess but someone else owns.

Can you provide a paper trail showing that the other persons have been making the payments and NOT you?

Make sure your atty knows EVERYTHING you've told us.

[btbeme]

OK, some general - very general - thoughts...

- You are a one third owner of the townhouse. If there is equity in that townhouse, you must be able to exempt it, else it (your equity stake) will be at risk.

- If you are on the title to the first house, you are a 1/2 owner of the equity, assuming your ex is also on the title. If so, you must be able to exempt that equity stake or risk it going away.

- Your attorney can advise whether you have allowable exemptions that would cover those assets. Examples of exemptions would be homestead and/or personal exemptions (wildcard, equity) allowed in your state. Colorado exemptions allow for $60,000 in home equity if you occupy that home. Since you do not occupy the home, I am hoping that you are still married or can somehow otherwise claim that place as your home - or have a really sharp lawyer who can make that exemption work for you.

More details would help, but on the surface I'd opine that you have some rough waters to navigate here. Not that this should be taken as legal advice, but I'd check closely with several attorneys before making the jump.

[AngelinaCat]

Here in Florida, at least, you must reside in your house for at least six months prior, and on January 1 of the year you wish to establish the Homestead exemption. Then you must renew it each year, until you build a history of living in your home for x number of years, whereupon, the exemption renewal becomes automatic.

[ValleYum]

Not to be a Debbie Downer here but the exemption reads "occupy". Can the OP take the BK exemption for the home he owned with his ex partner without living in the home?

[gunnagtthr]

Clearly I do not "occupy" them.....so, what does that mean as far as the bankruptcy goes?? and, yes, I will talk to my attorney, but please...give me some thoughts....

[SMinGA2]

Worst case scenario: the trustee forces the sale of these properties, and takes your ownership interest.

In reality though, the trustee would have to use the proceeds to first pay the mortgage & costs involved with selling.

Clearly I do not "occupy" them.....so, what does that mean as far as the bankruptcy goes?? and, yes, I will talk to my attorney, but please...give me some thoughts....

[gunnagtthr]

So, Staci
are you saying it might not be worth their trouble? The main house that I occupied for 12 years has about $60k in equity. I stay up there once a month for work (yes, UNCOMFORTABLE, but no choice...no money for a hotel), but do not live there the other 3 weeks per month.
the townhouse, my daughters, has 10-20K equity. I stay there about once every 6 wks for work, and my daughter has made all the payments.

When I gather all of my papers, does it make sense to write a letter detailing the situation. My daughter definitely should not be punished for my bankruptcy. The other house...would be an incredible bummer if it's sale was forced....

[LadyInTheRed]

Quite a while ago, somebody posted here about being on title to a family member's home for convenience only (either to get a loan or for easy transfer after the family member's death). They didn't consider the home theirs and the family member had made all payments. One of the attorneys who post here said that although the poster may be on the deed, they may not have "equitable title". This might be the case with your daughter's house. Some attorneys may not be willing to take a position like that because it could mean having to fight with the trustee. So, if your attorney says that won't work, you should consult with several other experienced BK attorneys and ask about this issue.

[btbeme]

These situations are exactly why having a good BK attorney is a must. In your case, I would opine that the chances that you won't have "complications" are pretty slim, but I'd leave that to your attorney. I'd expect that the Trustee would be very interested in $60k of equity, so it would be in your best interest to discuss this in depth with a well-traveled BK attorney or two or three.

A forced sale is usually a last resort for the Trustee. Forces sales are messy and complicated, which are two words Trustees don't really like (does anyone?). However, they have a sworn duty to extract whatever they can within the boundaries of the law to pay creditors. Unless you can somehow get the equity exempted, I would expect that you would have to strike a deal with the Trustee for a cash offer of some sort. But get some legal opinions soon.

Your options may include a Ch 13.

[ValleYum]

Do you have appraisals or CMAs on the houses to be sure of the equity amounts? Zillow's list price was $25k higher than a CMA prepared for us by a local short sale specialist who charged me $25 to do this. I would think the smaller the amount of equity involved with both places, the better it would be for you in the BK situation.

A good BK lawyer can tell you for sure - and the really good ones pretty much know what will be a "problem area" with the local trustees. btbeme and LadyInTheRed also give very good advice as always.

[gunnagtthr]

This may be a dumb question, but what is a CMA and how do I find one for the price you paid?

[gunnagtthr]

guess I should have googled it first! A certified market analysis. I would assume it is like a desktop appraisal I just had to get for my car? How do I find one?

[gunnagtthr]

could a realtor do a CMA? Do you attach it with your paperwork and hope the trustee accepts it?

[btbeme]

This may be a dumb question, but what is a CMA and how do I find one for the price you paid?

A CMA is a Comprehensive Market Analysis (or Comperable Market Analysis). It is done by a Realtor or broker and compares basic home values in your area, using public info, market trends, etc. as a guideline. A BPO (Broker Price Opinion) is a step up from a CMA (but falls short of an actual appraisal) and typically uses specific information about your home to analyze and adjust for its value as compared to local homes.

A CMA is pretty informal; a BPO is usually done in a lender's preferred formatting. An appraisal is done by a licensed appraiser in a universally approved format, under strict guidelines, and is much more detailed.