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    Homestead Exemption Question

    I mistakenly posted my inquiry to the chapter 7 forum but no realize this the appropriate forum for my question. Sorry about the duplicate post. Hoping someone can shine some understanding on my confusion over how the homestead exemption is applied.

    I currently live in Portland, Oregon (6 years now) and will be filing bankruptcy in the next few months. About six years ago, I used my personal unsecured credit cards to help fund a failing business I inherited from my father when he died. Right after I moved up to Oregon from California, my transplanted business took a downturn. About that time I also got married in the Philippines and my wife arrived here about in 2003.

    My wife and do not share finances, my credit was so bad by the time that she arrived her in the States that I did her more harm then good if I was attached to anything. Even on our taxes we submitted as married, but filing seperate.

    In 2006, my wife was able to get a sweetheart deal on the house next to one we were renting. She was able to get a 222K appraised house for 150K. The inspection, title, morgage, everything is entirely in her name.

    In my first consultation with a BK attorney, he was really unsure as to whether the trustee could go after the 72K in equity, 50K if you subtract realtor fees and such, that was in my wife's name. Oregon is not a community property state he told me, but the trustee might look at something called "equitable distribution". At this point he started leading away from a chapter 7 even though we said we could probably get with the means test.

    After leaving this consultation, I started thinking about the math involved. If my wife and I share equitable distribution of the equity in the house... roughly 50K after closing/realtor fees, etc, I would assume my share would be around 25K. Oregon has a homestead exemption of 30K per individual. If I apply this exemption to my half, its protected I think. But what about my wife's half? By my logic, the trustee cannot go after her half.. it is not community property and she shares none of my debt since it incurred before we married. Right? Is this how homestead exemption is applied in single-filer cases where the spouse shares no debt? Or do you have to apply the joint couple homestead exemption of 39K to the equity even though the other spouse is not filing?

    I've looked around and around the internet but cannot find anything close to answering my question. I have a few phone and walk-in appoints with some attorneys next week, but my wife is so stressed out they will take her beloved house.

    Any information regarding how homestead exemption is applied in my case would be greatly appreciated.

    Tony in Portland

    #2
    Originally posted by Tony_pdx
    In my first consultation with a BK attorney, he was really unsure as to whether the trustee could go after the 72K in equity, 50K if you subtract realtor fees and such, that was in my wife's name. Oregon is not a community property state he told me, but the trustee might look at something called "equitable distribution". ... Any information regarding how homestead exemption is applied in my case would be greatly appreciated.
    Tony, I did a quick net search for "equitable distribution Oregon bankruptcy" and found out that this legal doctrine is typically imposed in most states when divorce is a part of the bankruptcy to protect the non-working spouse from a spouse who files bankruptcy to deliberately shift the burden of their debt to the ex. Obviously this is not the situation in your case.

    However in Oregon, although Oregon is not a community property state, "the family law system governs the distribution of marital assets and debts, including both real estate and other property." (from http://www.dadsrights.org/oregon-divorce.php) This can make Oregon function much like a community property state, and that's what the lawyer you interviewed is concerned about.

    This is a situation where you need to interview at least 2-3 more experienced bk lawyers in your area to get other legal opinions about your situation. Hang in there - keep us posted about what you find out, ok?

    (P.S. I deleted your duplicate post in the Ch 7 forum - it's best to keep all your answers in one spot so everyone can see what's been suggested already.)
    I am not a lawyer and this is not legal advice nor a statement of the law - only a lawyer can provide those.

    06/01/06 - Filed Ch 13
    06/28/06 - 341 Meeting
    07/18/06 - Confirmation Hearing - not confirmed, 3 objections
    10/05/06 - Hearing to resolve 2 trustee objections
    01/24/07 - Judge dismisses mortgage company objection
    09/27/07 - Confirmed at last!
    06/10/11 - Trustee confirms all payments made
    08/10/11 - DISCHARGED !

    10/02/11 - CASE CLOSED
    Countdown: 60 months paid, 0 months to go

    Comment


      #3
      Originally posted by lrprn View Post
      Tony, I did a quick net search for "equitable distribution Oregon bankruptcy" and found out that this legal doctrine is typically imposed in most states when divorce is a part of the bankruptcy to protect the non-working spouse from a spouse who files bankruptcy to deliberately shift the burden of their debt to the ex. Obviously this is not the situation in your case.
      The purchase of the house wasn't a shift of any sort since she bought the house from a neighbor. Nor was it pre-bankruptcy planning. She originally tried to get the morgage with both our names on it but it wasn't going to sail with my credit history.

      As much as my wife jokes about divorce, marriage is still good!

      Originally posted by lrprn View Post
      However in Oregon, although Oregon is not a community property state, "the family law system governs the distribution of marital assets and debts, including both real estate and other property." (from http://www.dadsrights.org/oregon-divorce.php) This can make Oregon function much like a community property state, and that's what the lawyer you interviewed is concerned about.
      Thanks for the heads up. Followed your link and did some subsequent searching. Unfortunately, almost every reference to equitable distribution concerning bankruptcy also involved divorce. Was hoping that I would find something more concrete with regard to the exemption issue.


      Originally posted by lrprn View Post
      This is a situation where you need to interview at least 2-3 more experienced bk lawyers in your area to get other legal opinions about your situation. Hang in there - keep us posted about what you find out, ok?.
      That's definitely going to have to be the case. In the one in-office and two phone consults, the advice and opinions have been varying and unsure. In one case, it seemed like the attorney really wasn't listen to what I was trying to tell him.

      When I find anything definte, I'll let everyone know.


      Tony_Pdx

      Comment

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