Homesteading - no equity, dont need to?

[Majakat]

Atty said since between the 1st and the 2nd i am upside down, I don't need to homestead?

I am thinking of filing the papers anyway, may not be needed, but cannot hurt anything right?

[keepinitreal]

I agree. Who knows, maybe tomorrow something will happen (new plant opening, changed zoning, etc.) that could make the lot your house is on more valuable than it currently is.

[BobMango]

Atty said since between the 1st and the 2nd i am upside down, I don't need to homestead?

I am thinking of filing the papers anyway, may not be needed, but cannot hurt anything right?

Depends on your state and district. In some cases you can't use excess homestead as a wilcard if you don't claim homestead. But I would tend tothink your attorney may know better.

[Bkman2]

Think of it as insurance. I'm about $100K under but I still have a homestead. I work in real estate and I tell everyone to get one (if you refi you have to homestead again).

[iv65536]

BAsically the point is that if you are underwater like this the TT will simply abandon the property because selling it will not produce any money to pay unsecured creditors.

[DeadManCrawling]

I will add a word of caution.

Following applies to FL homestead exemptions only. I do not know where the OP is located.

In Florida, a BK 7 filer attempted to claim the new, larger, exemption for personal property. They claimed the exemption in spite of owning a house, which they intended to keep. They did not claim a homestead exemption, because the house had negative equity. Their assumption was based on the wording of the law: A debtor not gaining the benefit of the homestead exemption is eligible for 4k in personal property exemption.

The case was challenged by the UST. On appeal, the UST won the case and ordered the house sold. To make a strong point, I suppose, that you must, at least in Florida, choose one or the other.

The court reasoned that even though the debtors were not claiming the homestead exemption on filing, they were relying on the state's generous homestead exemption in their hopes of keeping the house. Thus, they were gaining "substantial benefit" from the homestead exemption while at the same time claiming the 4k personal property exemption.

This may not affect the OP in this thread, but I wanted to point it out for others who might be affected. At this point, I have not heard of similar challenges in Florida, but I would play it safe.

[Majakat]

I am in Nevada, and we are given a homestead AND 12k in household goods - plus 5k in collectibles/musical instruments - FL is so harsh, man...

even with the negative equity I am going to do the homestead I believe - I cannot see the harm...

[keepinitreal]

I am in Nevada, and we are given a homestead AND 12k in household goods - plus 5k in collectibles/musical instruments - FL is so harsh, man...

even with the negative equity I am going to do the homestead I believe - I cannot see the harm...

That's good. There are several threads here where a person lost their house to a trustee because the trustee discovered the house had an unperfected lien.

The trustee had the unperfected lien removed, sold the house and distributed the money to the creditors.