Will the State Sell My House in Bankruptcy? – Deb

Question:

Dear Steve,

I am separated from my husband well over 2 years. I live in our home. my gross income is 3400 with 1150 coming from SSD. I AM 34000 in debt—credit cards from the loss of marriage income and my loss of income—work. Zillow says our home (we both are on the deed) is worth 264,000 with a 35000 mortgage. But our home needs well over 50,000 in repairs. we are not behind house payments, Now if I file chapter 7 will they sell our home for whatever the state can get for it—take out the debt I owe and then split whats left between me and spouse? I want to keep our home

Can our home be kept out of chapter 7? I am filing and we are separated

Deb

Answer:

Dear Deb,

You should really sit down with your bankruptcy attorney you select and talk about how bankruptcy would work for you.

Bankruptcy is a federal court action, not a state court.

You absolutely need to include your house in your bankruptcy filing. But it depends on where you live if any equity is an issue or not.

And I assume you are filing bankruptcy as an individual here. So that adds a new wrinkle into the issue since the house is help jointly. But it depends if it is held as joint tenants or tenants in common. Again, I have to push you back to a local bankruptcy attorney who is licensed in your state to address specific local issues that might impact your filing.

It doesn’t really matter what Zillow or any site says, if you need an actual value for a bankruptcy filing you might need to get an appraisal to give a fair market value of your home in it’s current condition.

If your equity is exempt and you want to keep the home and make the payments as you are now, that should not be a problem.

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

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This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.