Selling House Before Filing Ch7 -- Protecting Proceeds

[tedbell]

I'm in Alaska. House is assessed at $218,000, owe $160,000. Alaska's current homestead exemption under AS 09.38.010 is $70,200.

AS 09.38.060 states: "An individual is entitled to an exemption of proceeds from the voluntary sale of an exempt homestead under AS 09.38.010 that are traceable for six months after the proceeds are received."

Does this mean I can sell my house at fair market value, deposit the proceeds in a bank account created solely to hold this money, and then claim homestead exemption on up to $70,200 as long as I file Chapter 7 BK within six months? Are there any obvious reasons why this is a bad idea? I have no other significant assets.

Thanks

[despritfreya]

To properly answer this question you need to meet with a qualified attny in Alaska. Case law on this issue varies.

In my state proceeds are exempt for 18 months so long as they are not commingled with any other funds. HOWEVER, years ago, the appellate level bk court determined that if the funds are still around in month 19 and the bk has not been closed the Trustee CAN take the $$. Further, bk judges have held that squandering the $$ during the 18 months (while in bk) is also a problem.

There is no “simple” answer. You really need to make sure you understand the “rules” in your jurisdiction before you file the bk.

Des.

[HHM]

As Desp points out, "probably". But that is something you need to discuss with a BK attorney in Alaska to make sure the courts have not put any further limitations on it.

[keepsmiling]

To CYA, you might also want to get an appraisal for the house.
Could be assessed value is from before the bust.

[tedbell]

Thanks for the replies