Homestead Exemption and Foreclosure

[lorelei]

I'm projecting that I will be filing for bankruptcy in April, soon after a 90-day foreclosure work-out period with the bank ends but before my house goes to sheriff's sale. My question is, will I still be allowed a homestead exemption, even though my house is still headed to foreclosure? It is still in my name, but I haven't been able to make payments on it in quite a few months and expect to lose it.

[justbroke]

A homestead exemption would only work if your home sells for more than what you owe to the creditor. The amount you owe the creditor will be the balance of the loan with accrued interested and attorney and court costs.

If you had no equity, don't expect any part of the exemption. So, do you even have any equity?

[lorelei]

Nope, of course not! Who does anymore?

How does that work with the federal wildcard exemption, then (I'm in Michigan, where I can choose)? Asking because I'm wondering if I can keep my car or not.

[lorelei]

Wait! I think I understand now? (And if I do, the title of this thread is way, way off)

I have a car I owe approximately $9,500 on. Kelly Blue Book says it's worth about $12,000. So my interest in the car is about $2,500, which puts me under the exemption amount. Did I understand that right?

[ValleYum]

You can use the over 10k unused portion of your homestead exemption as a wild card (yes, you are still entitled to it - even folks in rentals are) to stack on the federal exemption for a motor vehicle. (If you are filing with your spouse - you can double that wild card) You can split up the amount of the wild card and add parts of it it to cover an asset that isn't fully covered - like a car - or to cover things that don't have a specific exemption amount like cash, bank account, tax refunds, etc.

More info here: http://www.legalconsumer.com/bankruptcy/laws/#US

PS: Yes, you understand right since the federal car exemption is $3,450!! You can use the 10k wild card exemption for other stuff!! I will leave my original answer for future readers.

[lorelei]

What a relief! Happy weekend, everyone!

[justbroke]

Okay, that makes a big difference. I hope the answer helps you!