House Exemption Question

[cmw]

I am filing bankruptcy, my husbend is not. We own our home jointly and I have a question I would love you get your thoughts on. The house was appraised at 230000 (we are currently getting a second appraisal because we feel this is a bit high).
I am getting mixed information from my lawyer and the judge (or whatever they are called). My lawyer is saying we would take the appraised value minus the realtor fees, minus the amount we owe, devided by 2 (because I only own 1/2 of the house) and then subtract the exemption amount.

The judge is saying that you take the appraised value, minus the realtor fees, minus the amount we owe, minus the exemption and then devide by 2.

I admit that my lawyers way works out much more favorable for me, but at the same time it makes the most since as well.

I would love to hear your thoughts! I live in Oregon if that helps.

[StaciMM]

I looked up OR's exemption (from Bankruptcyinformation.com) and it shows $33k for joint owners, so I see it as you can exempt $16,500 of equity.

Using your attorney's method seems to be trying to take the full exemption ($33k) and applying it to your equity. Using the trustee's method is applying your 1/2 of the exemption allowance to your 1/2 of the equity.

I have to agree w/ the trustee.

[Minnymouth]

Yeah, I agree with the Trustee, his figures is what will probably be used anyways.....

Minny

[cmw]

Actually the Oregon Exemption for filing single is $25000. But does it make since to take this exemption out of my Husbends "1/2" of the house?

[StaciMM]

What I read didn't say sole/joint filers, but single/joint owners.

$25k exemption for sole owner and $33k for joint owners. Most states have the joint exemption at 2X the sole rate. The attorney could argue the fine line though, and try to get your exemption counted at $25k but I don't know your chances. If that were allowed, then one spouse could file and get the $25k exempt, and then separately the other spouse could file and get another $25k exemption.

Actually the Oregon Exemption for filing single is $25000. But does it make since to take this exemption out of my Husbends "1/2" of the house?

[cmw]

HHM I would love your thoughts!

[HHM]

I assume that since you are asking, that if you went the way of the Trustee, then something bad will happen, right? i.e. like having to pay some money to the trustee to redeem non-exempt home equity.

First, how much do you owe? (that way we have a working example).

It's hard for me to answer your questions as states do this differently depending on exemption law in that state. I would side with your attorney because its the "equity" that is exempt. After deduction of the Mortgage Note Balance and Realtor fee, that is your total Equity and your non-filing spouse presumably has a 1/2 interest in the total equity (not a 1/2 interest in equity after deduction of the exemptions). Thus, I would side with your lawyer and fight it if you have to.

[cmw]

Thank you! If nothing else this gives me more faith in my lawyer. This is exactly what is happening.

We recently went though a HUGE property boom in our area. We owe $155000 on our home and the guy is saying our house is worth $230000. We are getting a second opinion today.

He sent this demand letter for $18000. within 10 days or he said he would list our house for sale. His math looks like this:
230000
-13800 (realtor fees)
=216200
-155000 (what we owe)
=61200
-25000 (my excemption)
=36200
/ 2 (my portion of the house
=18100 This is what he wants us to pay

My lawyer sent him a letter in response saying his formula was incorrect and that my excemption should only be coming our of my portion of the house (so you would devide by two and then take the excemption) which would leave the difference 5600. The guy will not budge! He says that he math is correct and that he is listing the house. My attorney is not worried he just says that we need to get the additional appraisal, make an offer, if the guy rejects it we go to court.

[HHM]

Yeah, I agree with your attorney...

$230,000 Value
-$155,000 Balance on Mortgage Note
-$13,800 Realtor Fee
=
$61,200 equity
Divide in half
($30,600) to non-filing spouse
$30,600 filers share
-$25,000 filers exemption
$5,600 to trustee

Well, good luck no matter what happens.