HELP: Homestead exemption - Assest Protection - Advice (Florida)

[floridatimes]

Ive had consulted with different attorneys but have not gotten a direct answer.

My current situation is the following:

Background:

- I am unemployed and looking for work.


- I have the second mortgage (wells fargo) from a real estate property that i was unable to short sale and was ultimately foreclosed on. They filed a judgment against me for $33k. They last filed a Motion for Final Judgment in Nov 2013, but no hearing has been scheduled.


- I am behind on the mortgage for a year and a half for the property where i live. The property is not is foreclose. In Dec 2013, I got a bill that said I was in default and that they could accelerate mortgage.


o I had 3 realtors look at the property the first week of Jan 2014, they all estimate a listing price for sale of roughly $190-220k. County tax appraisers value the property at $115k. I owe between the first and second mortgage $335k.


Assets:

- 2004 BMW 325 ci. (Paid) I took the car to carmax and they made me an offer of $3000. I also paid for a certified appraiser and it came back for $4400.


- 2006 Ducati M620 Motorcycle (Paid). I have not had this appraised but I estimate between $2-4k.


- Some miscellaneous furniture. Nothing crazy. Live in a studio loft.


Debt:

Credit Cards $4500
Mortgage $335k


According to one of the attorneys i have been speaking to, states the following:

"If you are surrendering your home, the following exemptions apply:

Personal property - $1,000
Car - $1,000 (car came at $4,400)
Without a homestead exemption, an additional $4,000

Accordingly, we can use the additional $4,000 towards the vehicle. However, the motorcycle would not be protected. In addition, personal property includes furniture, bank accounts, cash, exercise equipment, etc. which would not be protected. Depending on those values, will depend what a Chapter 7 Trustee will require as pay back.

As to the homestead, if you use the homestead exemption, you cannot use the $4,000. If we use the $4,000 and you want to stay in the house as long as you can, the length of your stay will be determined by the Trustee. If a Trustee knows the property is being surrendered and they receive an offer on the house, the Trustee will take the offer and you will need to move. In other cases, the Trustee has abandoned its interest in the property. There are no guarantees as to which Trustee we will get and how long you can stay after you file. "

Questions:


1. I have asked several attorneys about the question to whether use the allotted $4000 towards the house or my car based on the figures i provided (house about $100k underwater) and i have not been able to get a straight answer. Like the answer above i am told only the risk. If somebody has some experience in this i would appreciate it. My goal is to stay in the property as long as i can till i get back on my feet. Right now without a job id be on the street.

2. Another member has mentioned that perhaps a bankruptcy might me to premature for me based on that i have no job and few assets to protect.

I quote: " After getting a judgment, the creditor can put a lien on your home and come after your non-exempt assets. Your home is too far underwater to worry much about that. Besides, being a year behind, it's only a matter of time before you lose the home. The creditor can't do any worse than the trustee as far as your car and motorcylce are concerned. They may not want to bother with those assets anyway. Judgment creditors usually are looking for cash assets rather than things they have to store and sell. Just keep whatever cash you have out of the bank. It may make more sense to wait to file BK after you have a job, have income to protect and can pay attorney fees. You may also be able to get into a payment plan to purchase your non exempt assets from the trustee."


Any thoughts on this? I have often wondered this too



3. Would pawing the title of my motorcycle be legal to gain extra money to pay for the BK process?

Lastly, I have limited funds available to me in the form of personal loans so the homework i do an information i gather will determine wether this BK can materialize or not.


Any information will be greatly appreciated. Thank you in advance...

[justbroke]

(Moderator Note 1/22/2014: please do not open multiple threads in multiple areas asking the same questions. It is against Forum rules and, even more importantly, dilutes your responses. I have removed the other thread.)

1. I have asked several attorneys about the question to whether use the allotted $4000 towards the house or my car based on the figures i provided (house about $100k underwater) and i have not been able to get a straight answer. Like the answer above i am told only the risk. If somebody has some experience in this i would appreciate it. My goal is to stay in the property as long as i can till i get back on my feet. Right now without a job id be on the street.

In Florida, it is a risk NOT to protect a home in which you want to stay for sometime by NOT using the homestead exemption. If you don't use the homestead exemption, the home is property of the Estate. Some crafty Trustees have forged relationships with some of the larger banks and the Trustee liquidates the properties on behalf of the bank much much quicker than any foreclosure. As such, you do leave yourself open if you do not protect the property. (In my case, I did not claim my homestead exemption and, to my surprise, the Trustee wanted nothing to do with the home which was about $100K underwater on a $650K property. I did not reaffirm either.)

So, there is no straight answer because no one knows what your particular Trustee will do. You do not know which Trustee will be assigned, and you do not know what that Trustee's appetite will be for becoming a real estate agent, so to speak. Some of these Florida Trustees have been able to get so-called "carve-outs" of $10K or more, plus expenses, by liquidation through the bankruptcy court (free and clear of liens!).

2. Another member has mentioned that perhaps a bankruptcy might me to premature for me based on that i have no job and few assets to protect.

Any thoughts on this? I have often wondered this too

If you want to go into hiding, never keep money in the bank, never get a job (over the table), and will never have another asset in the next 20 years, then you could go off-the-grid and just hide. I don't usually even mention that for an able-bodied person who has property -- you have property. Anyone suggesting that a person who owns personal property (a paid off car and motorcycle) should just hide, probably hasn't taken into consideration a judgment lien against that property. As such, I would only speak with an asset protection attorney or Florida bankruptcy attorney about "hiding".

3. Would pawing the title of my motorcycle be legal to gain extra money to pay for the BK process?

Yes. However, the title loan will not be discharged as to the physical motorcycle. In other words, if you don't pay the title loan after the bankruptcy, then the bike will be repossessed. Additionally, title loans can be very shady and typically carry high interest rates. Why not just sell it and say "so long my dear friend"? If you have a reputable credit union that would do a title loan, then I would go that route rather than Speedy Title of Florida! (Especially since you would actually need to make payments, or lose the bike!)

Lastly, I have limited funds available to me in the form of personal loans so the homework i do an information i gather will determine wether this BK can materialize or not.

I don't know what that means, but I hope that you find the information necessary to file bankruptcy.

[floridatimes]

(Moderator Note 1/22/2014: please do not open multiple threads in multiple areas asking the same questions. It is against Forum rules and, even more importantly, dilutes your responses. I have removed the other thread.)

"In Florida, it is a risk NOT to protect a home in which you want to stay for sometime by NOT using the homestead exemption. If you don't use the homestead exemption, the home is property of the Estate. Some crafty Trustees have forged relationships with some of the larger banks and the Trustee liquidates the properties on behalf of the bank much much quicker than any foreclosure. As such, you do leave yourself open if you do not protect the property. (In my case, I did not claim my homestead exemption and, to my surprise, the Trustee wanted nothing to do with the home which was about $100K underwater on a $650K property. I did not reaffirm either.)"

Wow. Ok, so in your case, you got lucky. Is this correct to assume?

So, there is no straight answer because no one knows what your particular Trustee will do. You do not know which Trustee will be assigned, and you do not know what that Trustee's appetite will be for becoming a real estate agent, so to speak. Some of these Florida Trustees have been able to get so-called "carve-outs" of $10K or more, plus expenses, by liquidation through the bankruptcy court (free and clear of liens!).

Thank you. I understand this much better now

.

"Yes. However, the title loan will not be discharged as to the physical motorcycle. In other words, if you don't pay the title loan after the bankruptcy, then the bike will be repossessed. Additionally, title loans can be very shady and typically carry high interest rates. Why not just sell it and say "so long my dear friend"? If you have a reputable credit union that would do a title loan, then I would go that route rather than Speedy Title of Florida! (Especially since you would actually need to make payments, or lose the bike!)"

Hmm. Ok, didn't take that into account. This might be an obvios question but just to make sure, lets say the motorcycle is worth 3k and i take out a loan for 2k from a pawn shop or title place like you mention....do i declare the full value of the motorcycle at the time of bankruptcy or the value minus the loan amount? Afterwards i have to pay off that loan and it cannot be discharged, that part i understood. Thank you for your info. So much information but the research is helping me understand.

[justbroke]

Wow. Ok, so in your case, you got lucky. Is this correct to assume?

I don't know. I had never considered it as a problem. I converted to a Chapter 7 in 2010 which was in the heat of the housing crisis and the Trustees were becoming more aggressive in Florida. I actually fared quite well.

Hmm. Ok, didn't take that into account. This might be an obvios question but just to make sure, lets say the motorcycle is worth 3k and i take out a loan for 2k from a pawn shop or title place like you mention....do i declare the full value of the motorcycle at the time of bankruptcy or the value minus the loan amount? Afterwards i have to pay off that loan and it cannot be discharged, that part i understood. Thank you for your info. So much information but the research is helping me understand.

You declare both. On the Schedules you must list the current market value as well as the amount of your exemption that you are claiming. You would also schedule if the debt is secured (Schedule F) and what amount of the current market value is owed to that creditor.

[floridatimes]

"In Florida, it is a risk NOT to protect a home in which you want to stay for sometime by NOT using the homestead exemption. If you don't use the homestead exemption, the home is property of the Estate. Some crafty Trustees have forged relationships with some of the larger banks and the Trustee liquidates the properties on behalf of the bank much much quicker than any foreclosure. As such, you do leave yourself open if you do not protect the property. (In my case, I did not claim my homestead exemption and, to my surprise, the Trustee wanted nothing to do with the home which was about $100K underwater on a $650K property. I did not reaffirm either.)"

Last question that i forgot to mention. You mentioned that trustees have forged relationships with the larger bank and liquidate the property on behalf of the bank much much quicker than any foreclosure. Would it make any difference if the property in question is not in foreclosure at the time of the BK? apparently my loan was transferred from BofA to a smaller Asset Management mortgage investment firm. Thank you

[justbroke]

I can't speculate on whether any Trustee is still trying this carve-out. The home does not need to be in foreclosure. Think of it as the Trustee asking the bank if it would like the Trustee to "quickly" (a term of art) liquidate the property and get it off their books! I just can't say whether many Trustees are still doing this.

Remember, they sell these homes as a short-sale which is not a foreclosure. It is a way for them to negotiate with the bank/lender and "carve-out" something for the unsecured creditors.

[floridatimes]

I can't speculate on whether any Trustee is still trying this carve-out. The home does not need to be in foreclosure. Think of it as the Trustee asking the bank if it would like the Trustee to "quickly" (a term of art) liquidate the property and get it off their books! I just can't say whether many Trustees are still doing this.

Remember, they sell these homes as a short-sale which is not a foreclosure. It is a way for them to negotiate with the bank/lender and "carve-out" something for the unsecured creditors.

I got so. So in theory , if i use the given $4000 homestead expemtion, they can't do anything...rather i could possible stay in it till it forecloses or work out a loan modification with the lender , if possible. thanks again. you have been very helpful

[LadyInTheRed]

You are a year and a half behind on your mortgage and unemployed. I think you need to accept the reality that you will not be able to save the home.

[justbroke]

I got so. So in theory , if i use the given $4000 homestead expemtion, they can't do anything...rather i could possible stay in it till it forecloses or work out a loan modification with the lender , if possible. thanks again. you have been very helpful

That is one line of thinking. However, I refer back to my original response to this earlier this month. I do not see why anyone would use their homestead exemption to protect a home which will go in foreclosure anyhow.

Of course, bankruptcy pre-planning should be strategic and you should have a plan. You should also have an alternate plan should your first plan fail; as in... Plan B. Only you can personally weigh the advantage is of protecting the home from the Trustee but not from the bank. On the other side of that coin, you would have hardly any exemptions to protect your other personal property, to which you seem endeared.

Rather than take anything that I say -- or that you read on the Internet -- as the best way to go about handling your assets, I'd rather you sit down with a competent professional (attorney) that can look at all your numbers. You will not be able to get a modification if you do not have regular income (a job). You will have similar problems with a title loan if you do not have regular income (a job). The value of your assets (car and bike) exceed the available exemptions.

You will need to come up with a workable plan that yields the best overall results. This may mean giving up some property to the Trustee. It could mean no filing at this time and just trying to wait out the judgments. I can't tell you which is the better option or strategy because this is truly a personal decision.