House exemption questions

[browneyes]

My home has hardly any equity based on my 2 mortgages and the appraisal that the lender did 2 years ago. However, I know that if it was appraised today, due to the market, it would be below what I owe.

If you are upside down, so-to-speak, can you still keep your home? I am filing chapter 7 most likely. (All of that other debt on my second mortgage is credit card payoffs from before, trying to be a good borrower!)

Another question I have is that I have a home with between 10 and 20 acres. We live out in the country. Do they exempt it all??

Thanks

[justbroke]

Yes, you can keep your home in a Chapter 7, so long as you're current. (You may be able to get the lender to do a loan modification too, allowing you to stay in the home). However, the key issue is whether it makes financial sense to keep a home you are substantially upside-down on. By substantially, I generally feel that more than 10% is substantial.

Exemptions depend on the State you live in. The key here is, the exemption is for equity in the home... not really the home itself. What I mean by that is, that if you are upside-down, you have no equity. Therefore, you have nothing to protect with an exemption. Exemptions just keep the creditors and Bankruptcy Court from taking assets and money from you.

[browneyes]

Thank you

I called the lender and they told me it was actually a broker's opinion and not an appraisal, so they wouldn't give me a copy.

If real estate hasn't been recently appraised, do I need to get it appraised, or does the trustee?

[justbroke]

Your lawyer will have it appraised. I haven't seen the Trustee doing appraisals, unless they are keeping the property and selling it off.

[pcn]

Is the home worth less than the total of the 1st and 2nd, or just less than the 1st? If less than 1st, you could look at a lien strip in ch13. We're considering that option rather than keeping both in a 7 since the 1st barely covers the value of the home now.