Homestead exemption - will this work

[De Los Muertos]

I co-own a house with my mom who is over 65. Only I want to file bankruptcy. According to CA exemptions 65+ gets $150,000 exemption.

CA Bankruptcy Exemptions

528,000 (value of house according to zillow)
-52,800 (10% cost to sell)
-247,000 (amount owed on mortgage)
-60,000 (HELOC)
-50,000 (exemption for me)
-150,000 (exemption for mom)
________

-31,800 (No unexempt equity!)

Did I do this right or am I still in trouble?

[lrprn]

Did I do this right or am I still in trouble?

Unfortunately I don't think you did this right. The way I understand it (and I'm not a CA bk lawyer, just a knowledgeable consumer).....

Since only you are filing bankruptcy, your mom's age doesn't matter - only yours does. And equity is what your home is worth minus what is owed on the home - that's all. You don't subtract your $50,000 exemption in the calculation.

Let's redo your home equity figures (assuming you are under 55 years of age) -
528,000 (value of house according to zillow)
-52,800 (10% cost to sell)
-247,000 (amount owed on mortgage)
-60,000 (HELOC)
________

231,800 (home equity for the purpose of bankruptcy)
-6,750 (using all of Tools of Trade exemption if that's allowed)
________

$225,050 to compare against $50,000 allowed exemption

This is quite a bit above the home equity you will be allowed on Schedule 1. And Schedule 2 protects your house even less.

So sorry to be the bearer of bad news . Of course, you should confirm this with an experienced CA bankruptcy attorney.

[JollyGG]

As I understand it only 1/2 the equity would be yours. However, it does seem that you still have a problem. Do you have the income to do a Chapter 13 that would pay your creditors at least as much as your nonexempt equity?

Additionally, zillow is great for some areas and rather inaccurate for others. Call a few real estate agents and find out what the home is really worth.

[De Los Muertos]

I understand that only half the equity is mine but if they decided to sell wouldn't they have to give my mom the full amount of her exemption which would result in no left over equity? This is all very difficult to figure out. I've been to two attorneys but neither one really knew. I've scheduled with two more so hopefully I can get my questions answered. I do not have enough income for a 13 so if this doesn't work I will just have to wait until the house depreciates enough. It is currently dropping by about 10k a month on zillow.

[kiddles]

If you sold the house now, half the equity would be your mom's and half would be yours. If you BK, and they sell it, half the equity would be your mom's, then you'd get the exemtpion amount from the other half, and the rest used for creditors.

[De Los Muertos]

Thanks it makes sense now. I finally talked to a lawyer who knew what was going on. Had to go through 4 to find a good one. Looks like I wont be filing bankruptcy right now. At least not until my house drops by 50-100k. Given the state of the market that shouldn't take too long.