How can we protect equity in a bankruptcy? 8 Answers as of May 10, 2011

My mother is going through BK and there have been complications since their current business is jointly in her name and my fathers. The question is - if my father has a separate property solely in his name and has a decent amount of equity (say 50K loan left on 200K property), is there a way to protect that equity in the chance the trustee chooses to go after the property? I'm able to pay market value of the loan, but that doesn't seem to do anything for the equity in the property. Not looking for anything shady - but curious if there are any options.

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Dearbonn Law Offices
Dearbonn Law Offices | Ajibola Oluyemisi Oladapo
All you have to do is exempt the equity in the property with the homestead exemption in the BK petition. Its a pretty large figure in WA, much more than 50K.
Answer Applies to: Washington
Replied: 5/10/2011
Mercado & Hartung, PLLC
Mercado & Hartung, PLLC | Christopher J. Mercado
You can use a property exemption to shield exempt assets. It depends what State you live in as to the amount.
Answer Applies to: Washington
Replied: 5/10/2011
Indianapolis Bankruptcy Law Office of Eric C. Lewis
Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
If there's equity, that's it. It's property of the debtor's bankruptcy estate and may or may be subject to liquidation. A co-owner may be able to work with the Trustee to "buy out" the equity.
Answer Applies to: Indiana
Replied: 5/9/2011
Law Offices of Michael T. Krueger
Law Offices of Michael T. Krueger | Michael Krueger
There are two issues that you should discuss with a bankruptcy attorney licensed in your state. First, is your state a community property state? Second, is your state an opt out state for exemption purposes? Equity can be protected through the exemptions available to you depending on what exemption law your state follows. In California, an opt-out state, we can choose between section 703 and 704. Under 704 a debtor can claim up to $100,000 in the homestead exemption. If the debtor is over the age of 65 the homestead exemption is $175,000. This means that the equity in the home is protected up to $100,000 or $175,000 depending on the age of the debtor.
Answer Applies to: California
Replied: 5/6/2011
Jackson White, PC
Jackson White, PC | Spencer Hale
Based on the value of this "property," I'm assuming it is Real Estate. Well, if the property is truly the sole and separate property of your father, and your mother has no claim to it, then the trustee does not have a claim in the property. You shouldn't have to do anything to protect this property. You should speak to an attorney to discuss whether there is a community claim in the property.
Answer Applies to: Arizona
Replied: 5/6/2011
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    If there are assets the Chapter 7 trustee is looking at, consider converting to Copter 13. That will allow you to pay the Chapter 13 trustee the excess value of those assets over 60 months. When I say "excess value" I mean the value above the allowed exemptions. The exemptions are different in every state. I suggest she see a lawyer experienced in the Chapter 13 cases.
    Answer Applies to: California
    Replied: 5/6/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    If your mother is over 65 there is a $175,000 homestead protection. If she isn't over 65 there is a $100,000 homestead exemption. The exemption should be claimed in the bankruptcy if there is any doubt about the trustee pursuing it. Consult a bankruptcy attorney to find out what is best in this situation.
    Answer Applies to: California
    Replied: 5/6/2011
    Law Office of Larry Webb
    Law Office of Larry Webb | Larry Webb
    Is the property their home? Are they filing jointly? We need more facts to answer, but depending upon their age and the jurisdiction they may be able to protect the equity with a homestead.
    Answer Applies to: California
    Replied: 5/6/2011
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