Q: Will Chapter 7 Trustee tries to sell my property if I have equity little more than the homestead exemption amount?
Depends on which home listing sites we look at, I can have $100,000 equity or $130,000. My understanding of California Homestead Exemption who is living with a family member is $100,000.
Will Trustee use the higher estimated value and proceed to sell my property? Is there such a range where Trustee will let go because there are selling costs involved and ending up with not much of money left?
A: If you qualify to use the California exemptions (i.e. residing in California for a certain amount of time) then depending on your circumstances you may have the option to use the $100,000 homestead exemption (there are certain requirements needed to be qualified to take the $100,000 homestead exemption).
On the estimated value question, every Trustee is a little different, however, many of them do take into account closing costs and real estate agent/broker commissions. Also, they may even hire their own appraiser to appraise the property. If the Trustee does find there is unprotected value in the property then the Trustee may hire their own broker to list and sell the property for the benefit of the bankruptcy estate's creditors.
Taking the homestead set of exemptions does limit what you can protect in other categories such as vehicles and bank accounts. If you are planning to use the homestead set of exemptions then I strongly advise you consult with and hire an experienced bankruptcy attorney so you can be sure to protect as much of your property as possible.
You can find many good and experienced bankruptcy attorneys right here on Justia. Many of us offer free consultations, feel free to take us up on it.
I hope this helps.
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A: The value of property isn't what you say it is in your schedules or what the trustee might think it is. The value is what a bonafide buyer will pay immediately in cash.
If that means the property has a high enough value to net money for the bankruptcy estate after all liens and your exemption, the the trustee can sell it.
Your attorney might want to file a Motion to Compel Abandonment. You will have to prove the real market value and that the value of the asset is inconsequential to the estate or is too burdensome to administer.
This is one reason why NO ONE should file bankruptcy without an experenced attorney representing them.
A: The answers already provided give you the information you need. Understand that the Trustee will do his own review of the property via a broker to ascertain the current fair market value. Usually, consideration is given to hypothetical costs of sale in determining if there is sufficient excess equity that could come into the case for distribution to creditors - after the mortgage, any unpaid taxes, and your exemption is paid. If you chapter 7 case has not yet been filed, I urge you to seek advice from an experienced bankruptcy attorney to review and discuss the potential issues. If the case has already been filed, I certainly hope that the homestead exemption was properly claimed on Schedule C and talk with the attorney representing the debtor - or look for an attorney immediately for advice. Good Luck.
A: Home listing sites like ZIllow.com and Realtor.com are a great starting point for home value and especially for comparable sales in your area (you can sort recent sales on Relator.com and then look for homes similar to yours in size and specs), but this data is not a substitute for getting an actual appraisal prior to filing bankruptcy. I recommend that my clients who own homes get a professional appraisal. It is critical to protecting your home that you understand the amount of equity that you have.
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