anonymuse
05-05-2006, 10:55 PM
This is an area where I haven't found a lot of information so I've been doing a little research for myself and thought I'd share it.
How to Value Real Estate for Bankruptcy Purposes
An issue that often arises in Georgia bankruptcy court - how does a bankruptcy debtor accurately calculate the value of his or her house. If you own real estate, you will be asked by your lawyer to estimate a value - and you need to be as accurate as possible. The exemption rules contained in the Georgia bankruptcy exemption law only permits you to shelter the first $10,000 of equity in your home ($20,000 of equity can be sheltered for a married couple).
At Ginsberg Law Offices, we encourage our clients to determine their home valuation based on a “quick sale” valuation - in other words, how much would you net (after commissions and closing costs and needed repairs) if you needed to sell your house in two weeks.
Written Evidence of Real Estate Values a Plus
Whenever possible, we recommend to our clients that they contact a local real estate brokerage company to request a “drive by” appraisal - it is always helpful to have a written “walk away” number if your estimate is ever questioned.
Bank of America Tool
http://www.bankofamerica.com/modular/index.cfm?template=hc_home_worth_modular&app=oma&sitename=modular
Homegain
http://www.homegain.com/
Domainia
http://www.domania.com/
Formal Appraisals Sometimes Needed
In rare cases, we might recommend that you obtain a formal appraisal of your property. For example, if you recently refinanced, and the appraisal purchased by the refinance lender shows a valuation higher that what your house would actually produce, you may need to get a “real world” appraisal for evidence.
Problems Arising from Inaccurate Valuation
Significant errors in real estate valuation can create problems in your bankruptcy.
If you list a valuation that is too low, you run the risk of a trustee objecting to your scheduled valuation and asking the Court for permission to seize your home.
In addition an obvious under-valuation will call your honesty, truthfulness and credibility into question in future dealings with your Bankruptcy Judge, your trustee and opposing counsel.
If you list a valuation that is too high, you may miss out on the availability of Chapter 7 or you may pay back more than is necessary in a Chapter 13.
Summary
Summary: if you own real estate and you are considering bankruptcy, take the time to research the value of your home or any other real estate you may own. Whenever possible, obtain written documentation from a reliable source to support your estimate of valuation.
--------------------------------
http://www.legalhelpers.com/blog/
Each state has a homestead exemption that protects a certain amount of equity in your residence from both the bankruptcy court and other creditors. The amount of equity you have in your home is calculated by subtracting the mortgages and other liens on the house from the current fair market value of the home. A bankruptcy attorney will help to determine whether the applicable exemptions can protect the equity in your property and will take the cost of selling the property into account when calculating the equity that is protected. If the equity is all exempt, you can generally keep the house, as long as you are current on all real estate taxes, utilities, and the mortgage(s) payments. Of course, you must continue making your monthly mortgage payments to avoid a foreclosure in the future.
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How to Value Real Estate for Bankruptcy Purposes
An issue that often arises in Georgia bankruptcy court - how does a bankruptcy debtor accurately calculate the value of his or her house. If you own real estate, you will be asked by your lawyer to estimate a value - and you need to be as accurate as possible. The exemption rules contained in the Georgia bankruptcy exemption law only permits you to shelter the first $10,000 of equity in your home ($20,000 of equity can be sheltered for a married couple).
At Ginsberg Law Offices, we encourage our clients to determine their home valuation based on a “quick sale” valuation - in other words, how much would you net (after commissions and closing costs and needed repairs) if you needed to sell your house in two weeks.
Written Evidence of Real Estate Values a Plus
Whenever possible, we recommend to our clients that they contact a local real estate brokerage company to request a “drive by” appraisal - it is always helpful to have a written “walk away” number if your estimate is ever questioned.
Bank of America Tool
http://www.bankofamerica.com/modular/index.cfm?template=hc_home_worth_modular&app=oma&sitename=modular
Homegain
http://www.homegain.com/
Domainia
http://www.domania.com/
Formal Appraisals Sometimes Needed
In rare cases, we might recommend that you obtain a formal appraisal of your property. For example, if you recently refinanced, and the appraisal purchased by the refinance lender shows a valuation higher that what your house would actually produce, you may need to get a “real world” appraisal for evidence.
Problems Arising from Inaccurate Valuation
Significant errors in real estate valuation can create problems in your bankruptcy.
If you list a valuation that is too low, you run the risk of a trustee objecting to your scheduled valuation and asking the Court for permission to seize your home.
In addition an obvious under-valuation will call your honesty, truthfulness and credibility into question in future dealings with your Bankruptcy Judge, your trustee and opposing counsel.
If you list a valuation that is too high, you may miss out on the availability of Chapter 7 or you may pay back more than is necessary in a Chapter 13.
Summary
Summary: if you own real estate and you are considering bankruptcy, take the time to research the value of your home or any other real estate you may own. Whenever possible, obtain written documentation from a reliable source to support your estimate of valuation.
--------------------------------
http://www.legalhelpers.com/blog/
Each state has a homestead exemption that protects a certain amount of equity in your residence from both the bankruptcy court and other creditors. The amount of equity you have in your home is calculated by subtracting the mortgages and other liens on the house from the current fair market value of the home. A bankruptcy attorney will help to determine whether the applicable exemptions can protect the equity in your property and will take the cost of selling the property into account when calculating the equity that is protected. If the equity is all exempt, you can generally keep the house, as long as you are current on all real estate taxes, utilities, and the mortgage(s) payments. Of course, you must continue making your monthly mortgage payments to avoid a foreclosure in the future.
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