Most people that are thinking about filing a Chapter 7 bankruptcy are worried about whether or not they will lose their homes as a result. But here in southern New Jersey that is a rare occurrence. Do you want to know why?
Bankruptcy Trustee's Test on Selling Your Home
The answer lies in a very simple procedure, called a liquidation analysis that can be done to determine whether or not the home would be at risk. The first step is to determine your equity in the home.
First, Determine Your Equity
In order to do this, you need two pieces of information:
- the appraised value of your home; and
- written payoff statements on all liens (usually mortgage loans).
From the appraised value of the home, you deduct the payoff amount for all mortgage liens and the cost of selling it (which is presumed to be 10% of the home's value). This is the net equity figure. But the trustee usually can't take this.
Then Exempt It!
This is due to a provision in the bankruptcy code called an "exemption" that allows homeowners to keep the equity in their homes up to a certain amount.
If both spouses are filing, the exemption would then be deducted for each spouse (check out current exemption amounts here). If only one spouse is filing, the rule of thumb would be to take the remaining balance of equity (if there is any), and divide it by 2. The debtor spouse's exemption would then be deducted. If the filer is single, then the individual exemption is taken from the equity.
If you come up with zero or a negative number, it is highly unlikely that the trustee would seek to sell your home in a chapter 7 bankruptcy. If you come up with a positive number, then there is a chance, depending how much is involved, that the trustee might be interested in selling it.
So What Do I Do?
It is highly unlikely that you will lose your home in a NJ bankruptcy. However, why take that chance? Have an experienced bankruptcy attorney by your side to do the test and be sure before you file!
If you live in Burlington, Camden, Gloucester, Salem or Cumberland County, know you need to file bankruptcy, and are ready to take action, then call me at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss your case and the risk to your home.
If you are looking for more information about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.
Not sure if bankruptcy is right for you? Take the quiz to the right to find out more!
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