Chapter 7 vs Chapter 13

[kamartin]

I was given information by a legal service that I couldn't file a Chapter 7 if I had equity in my home to cover my debt. He stated that I would have to file chapter 13. Is this normal? I have over $130k in total debt including my home and only make $22k/yr. I only have $24k in equity in my home.

Any information is appreciated.

Thank you.

[alh]

What state are you in, it will help with the answer as we can look up your exemptions.

[anonymuse]

It is the amount of non-exempt equity that you have in your home that matters. If the homestead exemption is $25K, then you are alright. However, if the homestead exemption is something like $15K, then you would have $9K in non-exempt equity (24-15=9). Even if you have non-exempt equity, if you sell some exempt property to make up for the difference to the trustee, it is still possible that you can file a Ch 7.

Have a few free consults with lawyers.

[kamartin]

I live in Georgia.

[SinkingFast]

Georgia allows a $10,000 homestead exemption/debtor filing. If you're filing single, you can exempt $10K. If you're married filing joint, you and your spouse can exempt $20K.

http://www.gabar.org/communications/...es/bankruptcy/

Ditto's to Anon's suggestion. Call around, make some Consult appts. with BK attnys. Discuss your situation with them and see what they have to say.

Meanwhile, do some legwork yourself. You may be figuring equity based of a tax assess valuation.

Call several Realtors, act like you're thinking of selling and you want to sell quick. Have them run a Competitive Market Analysis for you. You'll get a quick sale price for your home and you can determine what your actual equity is. You'll also find out if properties similar to yours or in your neighborhood are selling quick, or if they are setting on the market for a long time.

If you do have significant equity, then I'd suggest you read the Tactical BK handbook. There's a section in there that talks about people like yourself, with equity in your home. Legal things you can do prior to filing.

http://www.bankruptcyforum.com/showthread.php?t=6635

Section 15, starting on page 41. Just some thoughts for you there.

Also remember, if you choose to do something like that, you won't be filing BK right away. The BK Court "presumes" you were bankrupt at least 90 days prior to filing.

[anonymuse]

There are several methods to determine the value of your house. I'm lucky for living in a townhouse so units can be priced basically based on end units (more square footage) and middle units. Age, condition, extras (finished basement, etc) also factor in, but at least I have a starting point to justify my numbers. It gets harder with houses since you are comparing apples and oranges unless you live in a community where the same builder just had 2-4 models and kept building nearly identical ones repeatedly in a development.

Assessments and sales are public records. Find your county web site and look for the assessors page. On ours, we can search tax records on anyone based on a lot of different criteria. The part I check frequently is the sales search--I look at all townhouses in the town (I live in podunkville) and see what has sold.

Remember, you're looking at what stuff is actually selling for, not asking price. I've been keeping track of properties since the beginning of the year. I have the history from realtor.com to see how long homes are on the market, how much they were being reduced, who pulled their home from the market, etc. For me, my "gem" is an identical unit that was on the market for 6 months, then dropped the price $30K (which is $15k below my CMV) and still hasn't sold after another 3-4 months.

One site to use for a really rough estimate is www.zillow.com

Good luck and keep asking questions.

[FilingOnMyOwn]

Why would you even consider filing bankruptcy if you have adequate net worth to cover your debt. It makes no sense whatsoever and completely defeats the purpose.

[anonymuse]

Why would you even consider filing bankruptcy if you have adequate net worth to cover your debt. It makes no sense whatsoever and completely defeats the purpose.

Are you asking me? (I'm not sure why?)

Speaking in general, someone might have enough equity in their house to cover their debt, and the homestead exemption is high in their state. Instead of paying off your debt by selling your house, the law provides a homestead exemption since they see the value people's "wish" (wrong word choice) to own a home--so the law provides for you to discharge certain debts and maintain a home.

[SinkingFast]

Why would you even consider filing bankruptcy if you have adequate net worth to cover your debt. It makes no sense whatsoever and completely defeats the purpose.

In this case, FOMO, we don't know the value of the house and/or the level of unsecured debt. Does this person own a financed car??

Could be the OP owns a house worth $50K and has tons of unsecured debt.

If on the other hand, the OP owns a house worth $125K, then level of debt wouldn't be so much. OP could potentially have enough equity in the home to pay off the other debt.

We would definitely need more info to help this person effectively.

[FilingOnMyOwn]

No, I wasn't asking you anonymuse, I was asking the original poster.

Sinking, he/she stated they have 24k in equity which is enough to cover their debt.

My overall view was just to wonder if there is any real reason to file here, except for having a hard time paying bills in the current situation.

If someone has a positive net worth, they should not file imo.

[anonymuse]

I read their post as the have $24K in equity and $130K in debt.

[FilingOnMyOwn]

I read their post as the have $24K in equity and $130K in debt.

Ok my misunderstanding, I thought they said they owed 130 on the house.