I was wondering how creditors handle extracting out cash from an exempted home. Obviously, if the trustee determines that the home has a certain market value, he is going to demand that the house be taken, and after it wold be sold, he would give me the exempted amount.
Now, I am wondering exactly what level of "seller motivation" he would use to determine the price. I would think that since he would need to get everything done rather quickly, that he would determine what the price that would be low enough so that a buyer would be found quite quickly. Then since obviously he would not want to sell it himself, he would hire a real estate agent. The bottom line is that there would probably be a 10% hit on the market value to make it move quickly, and then a 6% hit on top of that to go the agent.
So in the trustee's mind, if he sees a house that would have a normal market price of $100K, he would determine that the "wholesale" value of the house would only be $84K. (I just pulled that 10% figure out of my azz, it could be anything.) Now, if the exemption would be $70K, he would be thinking that the creditors would get $14K at the end of the deal, so if somehow the debtor could come up with that $14K (perhaps a relative comes in with a cash, or the creditors want to get back in the game an offer the debtor to come up with the cash in 90 days at a 10% premium, etc.), the debtor could stay in his home and everybody would live happily ever after.
Perhaps the same thing would be true of the personal possessions, although it would seem that the costs and depreciation of a lot of things would preclude them from being worth garnisheeing.
As always, I welcome comments and suggestions.
Now, I am wondering exactly what level of "seller motivation" he would use to determine the price. I would think that since he would need to get everything done rather quickly, that he would determine what the price that would be low enough so that a buyer would be found quite quickly. Then since obviously he would not want to sell it himself, he would hire a real estate agent. The bottom line is that there would probably be a 10% hit on the market value to make it move quickly, and then a 6% hit on top of that to go the agent.
So in the trustee's mind, if he sees a house that would have a normal market price of $100K, he would determine that the "wholesale" value of the house would only be $84K. (I just pulled that 10% figure out of my azz, it could be anything.) Now, if the exemption would be $70K, he would be thinking that the creditors would get $14K at the end of the deal, so if somehow the debtor could come up with that $14K (perhaps a relative comes in with a cash, or the creditors want to get back in the game an offer the debtor to come up with the cash in 90 days at a 10% premium, etc.), the debtor could stay in his home and everybody would live happily ever after.
Perhaps the same thing would be true of the personal possessions, although it would seem that the costs and depreciation of a lot of things would preclude them from being worth garnisheeing.
As always, I welcome comments and suggestions.