CO Homestead exemption - urgent question

[HHM]

The trustee sounds like he is pushing the issue a bit. But he does have an argument.

Yes, the homestead attaches to the property...but, you are the debtor, and do not reside in it, as such, you are NOT qualified to claim the homestead exemption as a BK debtor.

The issue then becomes, what happens to the house. You are the deeded owner with your husband. You are either joint tenants, or tenants in common. (the deed would specify), but the result is the same.

Even if your husband is entitled to the exemption, (a) he is only entitled to half, and (b) that doesn't mean the trustee CANNOT sell the house. I believe the trustee can do it. The trustee can do whatever any of your creditors could do. So, for example, if Chase got a judgment against you for $20K, and then filed that judgment as a lien at the county, they could then foreclose that lien. Strictly speaking, the trustee CAN take YOUR interest in the property and sell it, because there is no exemption to cover it. As a practical matter, what that means (since presumably we are talking about a regular residence and not farm land), the trustee cannot "partition" the property (that means divide it between you and your husband), so the trustee gets to sell the ENTIRE property. Net result, all prior mortgages get paid, husband gets his homestead ($30K) the rest goes to pay your unsecured creditors, and if any left over, divided between you and your husband.

[HHM]

Forgot to mention your potential options.

1st, as it sounds like is being done, a good appraisal is needed. Also know, the trustee does need to sell the house in a commercially reasonably manner (meaning he cannot fire sale it). Depending on the amount of equity the "trustee would realize from sale"...

Assuming the trustee actually moves to sell the house, you can either (1) negotiate an amount with the trustee that you can afford to pay. This is probably what the trustee is shooting for. The trustee doesn't want to sell the house, that costs money, unfriendly tenant, no idea the interior condition, etc etc. it is a big hassle. So, the avoid selling, he will probably accept a lump sum cash payment. For example, if the trustee would likely realize $10K from the home sale, you offer $5K and negotiate from there. It will take months to sell and there is no guarantee on the price. (2) convert to a chapter 13.

[justbroke]

Yes HHM... I think this case will hinge on the valuation and how much equity is actually there. Attorney seems like a fighter.

[HHM]

Yes HHM... I think this case will hinge on the valuation and how much equity is actually there. Attorney seems like a fighter.

Or the attorney just doesn't know any better! (honestly, that wouldn't surprise me)

[gunna2gtthr]

You both have given me such thorough information. Now that HHM jumped in, it does appear correct in my assessment that there are two potential ways this can go. My house is my only asset left. It probably has $35k or so in equity. minus $10k or so in realtor commission and miscellaneous (if it sells for what I think it might). $25k left over after sale would give the trustee $12,000ish of my equity and my ex would get the same, correct? Besides the question I asked, I mention this so that you know how much $ we are talking about. My debt is far, far higher than my equity.

Given that information, I imagine it seems plausible that the trustee would go after that money, as long as he legally could, doesn't it? What is frustrating me is when I retained my attorney, and we discussed the house he insisted that the courts could NOT touch it because the exemption goes with the house, and if there is a co-borrower, the exemption follows the house up to $60k...period. If the house has $35k in equity, it is exempt...period, because the exemption is with the house. This went against everything I had read, and the more he talked about it, the more confused I got. I know he's a "fighter," but if law supports other than what he is saying, he can fight all he want and it isn't going to keep the house from being sold. I told him the clerk said otherwise and he said she didn't know what she was talking about, then he walked away.

After chatting on this thread and taking in all the info, I am correct in understanding the house CAN be sold, correct? And, if so, what is the deal with my attorney saying they CANNOT sell it because the "exemption follows the house." ??

Another question: I am pretty sure we are JTWROS on the house. If the ex gets a $30k exemption, is the ex entitled to all equity up to $30k? Or, entitled to exactly half of the equity up to that amount?

I look forward to your answers.
Thank you so very much!