Q: Bankruptcy in Missouri question.
I read online: "If you own the house with your spouse as tenants by the entirety and do not have joint debts, the house is completely exempt, and the equity you have in it is irrelevant regarding exemptions."
Do you have to be married to meet this exemption?
I own a house with another person, but we are not married.
This is the full story.
I bought 2 acres for $13,500 and he built a house, but he never finished the house. He spent around $15,000 - $25,000 in building materials. He now lives in another country. He considers it his house, but lets me live in it. Both of our names are on the deed. Even though the house is unfinished, I don't want to lose it because I don't want to be homeless. I think it would be next to impossible to sell the house since houses in this area that are finished take years and years to sell.
My second question would be if I don't meet the exemption above, can the Trustee sell a house that is in two people's names?
A:
Hey, I know some folks in your town.
Yes, you have to be married to use the marital exemption. Since you are not married, you both own the property either as (1) Joint Tenants with rights of survivorship or (2) Tenants in common. Both are treated similarly in bankruptcy. (there are exceptions). Half of the equity belongs to the co-owner and would not be part of your bankruptcy estate.
Missouri allows $15,000.00 exemption in your homestead (your half of the equity). As long as you reside there, you can claim it.
To determine whether the trustee would investigate selling your house to pay creditors, you need current values not what you paid way back when. Since you say the house is unfinished, but livable, the numbers from the assessor's office, zillow, comparable properties may not give a true picture of your house's value. You probably need a real estate broker, appraiser, or some other professional to see the inside and out, know all the repairs, know all the unfinished work and then give a professional opinion to sell "as is". This would be worth paying someone if it meant saving your home. The trustee will appreciate that you used an objective professional and did not just make up a number out of thin air.
After you complete your bankruptcy, you should look into dealing with the other person on the deed. This will haunt you for as long as you both own the property together. A partition suit does not always get a "fair" result.
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