Advice of Property Exemption - Car, Home, Motorcycle

[floridatimes]

Brief Overview:

Old real estate business transaction came back from the past to haunt me. Im getting sued in court from it and am curreytly in the final stages of a judgment being placed against me ($33k). Legal advise recommends that I declare bankruptcy since I am currently unemployed and am behind on my home payments by one year.

Assets: 1 - 2004 Car (Paid) Valued between $4500 Trade In - $9000 Retail (im not which value is used in BK to determine worth, one lawyer said auction, another retail)
1 - 2006 Motorcycle (Paid) Valued between $1500 Trade In - $3500 Retail
Home (underwater) Owe $300k valued by city tax appraiser at 150k.

Debt

Property worth 300k
Credit Cards worth 4k


Not sure how to estimate value for both of these..

Several lawyers have advised me the following:

Florida has a property exemption of $5000 and assets exemption I believe of $1000.

Lawyers have suggested that i use the $5000 on my homestead property in order to live in it till it forecloses which can be anywhere from 6 months to 2 yrs. They say that if i don't use the exemption on the property that the creditors on a rare circumstance can try to short sale the home and i can be out in the streets before i find employment or a new place to live with a 30 days notice. Notice that the property is not yet in foreclose, i only behind on payments for about 1 year and received a notice of intent to accelerate loan on 12/20.

Since I am claiming most of the exemption on my home, this leaves my car and motorcycle. $1000 can be used towards the value of these, but the remainder of the value I am told must be paid to creditors or turned in for them to sell. I am broke, thus the bankruptcy, and i cannot afford paying creditors between 5-8k of money that i don't have to save my car for which i will need for transportation for work.

This leaves me to my question:

1. Are the lawyers correct to use the property for the exemption instead of the car?

2. Would I be able to get a title loan on the car to help pay for my bankruptcy legal fees ($1800)?

3. What would be a scenario where i can do the bankruptcy without having to come up with all this money or turning in the car/motorcycle?

Thank you in advance for you advise.....

[justbroke]

(Moderator Note: 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.)

Florida has a property exemption of $5000 and assets exemption I believe of $1000.

Florida has a wildcard exemption of $1,000 and a (statutory) "unused" homestead exemption of $4,000 (per debtor) which can also be used as a wildcard. You also get a $1,000 statutory exemption in one motor vehicle. Unfortunately, that $5,000 "wildcard" is for all other property (such as clothing, furniture, household items, electronics, etc).

Lawyers have suggested that i use the $5000 on my homestead property in order to live in it till it forecloses which can be anywhere from 6 months to 2 yrs.

I don't understand that at all. First, you would simply use the "unlimited homestead exemption" provided by the Florida Constitution (Article X Sec. 4); there is no dollar value for the homestead exemption. That would leave you with the statutory $1,000 wildcard still available plus the $1,000 motor vehicle exemption. Remember, that if you use the homestead, you would lose all your other property (car, motorcycle, and other personal property) because you'd have limited exemptions ($1,000 wildcard plus $1,000 vehicle) to cover them. You should sit back down with a few more attorneys and make sure you understand.

They say that if i don't use the exemption on the property that the creditors on a rare circumstance can try to short sale the home and i can be out in the streets before i find employment or a new place to live with a 30 days notice. Notice that the property is not yet in foreclose, i only behind on payments for about 1 year and received a notice of intent to accelerate loan on 12/20.

Yes, this is rare. The creditors would not do this, but the Trustees are sometimes known to try to recover some money on behalf of creditors. There is no telling what the Trustee would do in your case. There may also be a conflict since you would be surrendering the home YET claiming a homestead exemption!?!? It does not make any sense, to me. I certainly would not reaffirm a home that is 50% underwater.

Since I am claiming most of the exemption on my home, this leaves my car and motorcycle. $1000 can be used towards the value of these, but the remainder of the value I am told must be paid to creditors or turned in for them to sell. I am broke, thus the bankruptcy, and i cannot afford paying creditors between 5-8k of money that i don't have to save my car for which i will need for transportation for work.

You really need to decide if "protecting" a home which you will eventually lose to foreclosure, and has no equity!, is worth losing your vehicles and other personal property.

1. Are the lawyers correct to use the property for the exemption instead of the car?

I can't believe that every attorney suggested that you take the homestead exemption and try to protect a home with $0 in equity (and in fact may be $150K underwater). Ask the new attorneys, that you are going to have consults with, whether this is a better strategy when you'll lose the home anyway. Is it worth losing $6K (+) in other property, to stay in the home 6-12 months longer? (And that's not guaranteed unless you fight the foreclosure which will cost you at least $1,500 to fight.)

2. Would I be able to get a title loan on the car to help pay for my bankruptcy legal fees ($1800)?

I do not know if an attorney suggested such, but I would beware of a title loan. They are typically high interest and short term. It is an interesting strategy if you can get a title loan from a reputable bank (not fly by night title loan company).

3. What would be a scenario where i can do the bankruptcy without having to come up with all this money or turning in the car/motorcycle?

There is none, if you choose to protect the house. The house will eventually foreclose and by asserting a homestead exemption, you may end up surrendering those unprotected assets to the Trustee and the Trustee will sell them (for less than they are worth).

The question is always... what are you trying to do and what do you want your personal life to look like on the day after your discharge?

[bcohen]

It sounds to me like you have nothing to gain by filing for bankruptcy at this time. You have no wages to garnish, and your house is underwater--and you are planning to surrender it anyways--so you don't have to worry about a judgment lien. It sounds to me like even if the plaintiffs in this lawsuit obtain a judgment, there's not a whole lot they can do to you, and you will probably lose more in bankruptcy than you would trying to dodge a judgment creditor!

My advice is to find out what your state's non-bankruptcy exemption amount is for money in a bank account, and keep your balance well below that amount. If you have substantial funds in the bank, the time to withdraw that money is now, before the judgment is granted, and keep the cash in your house. (In fact, you should have done that already, upon receiving notice of the lawsuit.) If you are receiving unemployment or disability benefits, you should receive the money on a card, and do not have to worry about a judgment creditor seizing those funds.

If and when you become employed again, and thus run the risk of having your wages garnished, that is when you should consider filing for bankruptcy protection. Please note that I said "consider filing", not that you should definitely do it. If your new job is only part-time, and the pay is low, then you may be exempt from garnishment anyways. Once you have a good job, or the mortgage lender begins foreclosure, it might be time to file.