What is the equity basis for a home exclusion on a Chapter 7 bankruptcy? 12 Answers as of November 08, 2011

You are right. It has to be secured by the property.

The equity on your home wil be calculated based on the actual secured debts recorded against the home. If the loan for the pool, etc is not secured by your home it is simply an unsecured debt that would be discharged in bankruptcy.

Check the papers on the pool. It maybe secured by the home. If not, it will not be counted but then you get to discharge that debt.

Generally they secure the loan with a lien on the house, which would reduce the equity.

The loan must be secured by the property to count against the equity. The homestead exemption is $75,000 for a single person, $100,000 for a married couple, and $175,000 if one of the residents is 65 or older or disabled, or a person 55 or older with income less that $15,000 if single or $20,000 if married.

Equity in a home is calculated by taking the value of the home and subtracting the liens that are attached to the property. Depending on how much equity there is the equity may be exempt or not exempt or partially exempt. If there is non-exempt equity it might be advisable to file chapter 13 to protect the non-exempt equity.

It needs to be secured at the time the loan was taken out.

Equity is dependent upon loans secured by the property. For instance, if you put the pool on your Visa card, its obviously unsecured. Therefore, that debt is not secured by the property - therefore, the equity would not have anything to do with that amount of debt.

The debt needs to be secured by the property. That said, if you have less than 100k equity, you're probably fine. Court will allow reasonable selling costs to be subtracted from value of home before calculating equity. Minimum homestead is 75K. Court generally figures cost-of-sale at 8% (that's 24k on a 300K house).

$75,000.00 if you are single $100,000.00 if you are married $175,000.00 if you are married, and one or more spouses is disabled and/or over 65 years of age; if you are single, over 55 and have a household income of less than $15,000.00; If you are married with an annual income of $20,000.00 or less. The loans must be secured by the house. If the pool loan is unsecured, it does not count. You can find out if its secured by going to the county recorder's office and seeing how many deeds are recorded against your property.