Chapter 7 help...excemptions

[julie295]

What is the name of your state? Missouri
We are considering filing chapter 7 due to a 29,000 debt from a foreclosure on rental property gone bad. Will we lose our house in the process? We are confused about exemptions...MO law says only 15,000 of a homestead is exampt...does that mean we lose everything but $15,000 of our home? Thanks for any clarification you can provide.

 

[Ladynred]

The 15,000 exemption goes toward the EQUITY in your house, not the total value. So, take the value, subtract what you owe, and there's your equity. If you owe more than its worth, then you have nothing to worry about.

 

[julie295]

So...if our house is worth approx 255K and we owe about 219K...what does that mean? Thanks for the help~

 

[spoiler]

where did you come up with the 15,000 exemption? From all the pages I have been searching it shows this : "Real property to $8000 or mobile home to $1000 (joint owners may not double)" and it also looks like they don't let you use the federal exemptions either. but even looking at the 15,000 exemption you have to much equity. there are a few other things that you can look at such as : "Property held as tenancy for the entirety may be exempt against debts owed by only one spouse?" or there is a wild card you can use as well "$1250 of any property if head of family, else $400; head of family may claim an additional $250 per child". In all of these situations you may still have too much equity...which means they will probably take your house to pay off your debts if you file a chapter 7. How did you come up with the value of your home? are you sure it is worth as much as you say? do you have a second mortgage or anything else? If you do you should subtract that from your equity as well.

 

[julie295]

I found the 15,000 on a website about Missouri bankruptcy law. We guessed on the value of the home based on recent sales in the neighborhood. If it is worth less than that it is better for us, right? How do they determine the worth of a home in this process, do they run comps like when you refinance?

 

[spoiler]

my lawyer told me to do the same thing you did when coming up with the value of our home, so you did good when coming up with the value of your house...however...you can only have 8,000 in equity. According to your earlier post you have 36,000 in equity!! That is a ton of equity! The trustee is going to want that equity to pay your creditors and that means you will have to give up the house. You said before that you are fileing because of 29,000? Is that the only reason you are fileing? is this the only debt you have that is dischargeable?? If so you should look at other options...what is your total debt to income ratio? do you have more than 100 left over at the end of the month after you pay for all your bills and need??

 

[Ladynred]

The MO laws have changed, the homestead exemption is 15,000:

The homestead of every person, consisting of a dwelling house and appurtenances, and the land used in connection therewith, not exceeding the value of $15,000.00, is generally exempt from attachment and execution. This homestead exemption shall not be allowed for more than one owner if one owner claims the entire amount allowed but, if more than one owner claims an exemption of the same property, the exemption allowed to each of such owners shall not exceed, in the aggregate, the total exemption allowed as to any one homestead. (Section 513.475.)

And from the MO statutes:

Homestead defined--exempt from execution--spouses debarred from selling, when.

513.475. 1. The homestead of every person, consisting of a dwelling house and appurtenances, and the land used in connection therewith, not exceeding the value of fifteen thousand dollars, which is or shall be used by such person as a homestead, shall, together with the rents, issues and products thereof, be exempt from attachment and execution. The exemption allowed under this section shall not be allowed for more than one owner of any homestead if one owner claims the entire amount allowed under this subsection; but, if more than one owner of any homestead claims an exemption under this section, the exemption allowed to each of such owners shall not exceed, in the aggregate, the total exemption allowed under this subsection as to any one homestead.

2. Either spouse separately shall be debarred from and incapable of selling, mortgaging or alienating the homestead in any manner whatever, and every such sale, mortgage or alienation is hereby declared null and void; provided, however, that nothing herein contained shall be so construed as to prevent the husband and wife from jointly conveying, mortgaging, alienating or in any other manner disposing of such homestead, or any part thereof.

Call a couple of realtors and ask them to give you a 'walk away' price on your home. Then subtract all the selling fees and any repairs the property may need and you'll be in the ballpark. Then subtract what you owe -- and there's your equity.