Correct house value

[Bob Walker]

I am dealing with our Trustee in the matter of the value of our home and are worried that if the value is too high he could "take it".

If our primary residence's equity happens to be above the allowed exemption what happens? Can the Trustee force us to sell our home though we are able to pay the 1st and 2nd mortgages?

We're VERY worried as we have never done this before! Please help.

[SinkingFast]

The Trustee could seize and sell your house. If you have a ton of equity to grab. Not likely if you're only a few thousand $$$ over your Homestead Exemption.

Trustees have costs to sell just like us. They hire a Real Estate Agent/Broker. Plus there's all the typical costs to sell. Then the Trustee has to distribute the funds. Some of which come to you for your Homestead Exemption. And then pay an Accountant to Audit your case. On average, a Trustee is looking at 10% costs to sell a house.

Houses can be a real headache for a Trustee. Typically, they don't move quickly and don't bring top dollar. Ch 7 Trustees wanna get in, get out, and move on. Next case. Ding!

If you're close on equity, the Trustee will more than likely offer to settle with you.

[Bob Walker]

Thanks

But what about the 1st and 2nd mortgage? Aren't they paid first before the Trustee?

Example:
$400,000 (sales price)
-$40,000 (10% to sell)
--------------------------
$360,000 remains
-$310,000 (1st mortgage)
- $48,000 (2nd mortgage)
--------------------------
$2,000 remains

Now, based on this example, would the Trustee still force us to sell the house so they can get the measely $2,000?

Kinda unfair if you think about it, because it forces one out of their home if they are able to still pay for it.

[hopefulrelief]

Based on our case...just got the ruling on Friday...he will probably leave it alone. We have a home est value at $265,000, we owe $233,000, we could exempt 15,000 (homestead), and figured $15,000 in realtor fees. Left $2000.00...just like you. He sent his realtor over to check out the house (we have comps in the neighborhood in the $4000,000+ range. All came back on Friday...he is not interested. I didn't realize this until I spoke to my attny on Thursday but if he was to force us to sell...he would have also had to pay us $15,000 per our exemption! Does your state have exemption for your home?? Before we knew what he was going to do my attny said he may ask us to pay him the $2000.00...thank God he didn't...we were able to protect $3000.00 from our tax return and that is what we have to start over from and really didn't want to see that gone! Sound like you should be OK unless I am overlooking something!
Hopeful

[SinkingFast]

What State, Bob?? We can help you check on your Homestead Exemption.

[FilingOnMyOwn]

Now, based on this example, would the Trustee still force us to sell the house so they can get the measely $2,000?

Not likely. If it were only 2k, and he still wanted that 2k, he would probably just ask for the 2k in cash. Still unlikely tho for that amount of money.

[Bob Walker]

State

What State, Bob?? We can help you check on your Homestead Exemption.

I know my exemption is above $35k in my state so I should be OK.

If I am correct, this means we are alloted $36k in equity above what we owe vs. what the house sells for.

If the house did sell for $400k, and all that remained was $50k, we still get $36k of that, correct?

Thanks everyone!

[jal1129]

Yes the trustee would have to pay you your exemption.

[spell]

...so you have

$400,000 (sales price)
-$310,000 (1st mortgage)
-$48,000 (2nd mortgage)
-$35,000 (homestead exemption)
--------------------------------
$7000 unexempt value

If this is the case, I'd say you're fine. It takes more than $7000 to sell a $400k home.
But make sure you're dealing with a recent appraisal.
And talk to local BK attorneys they'll have a hands on understanding of local Trustee's aggressiveness towards Real Estate.

I know you claim you can afford the home, but another view is that you've neglected your other creditors in favor of the home.
The fact that you can keep it is distinctly different from whether you should keep it.
Maybe you should trade to more modest digs.