Increase in property tax value pushed us $15k over the exemption. What now?

[Broke2011]

We were just getting ready to file Chapter 7 bankruptcy when our new real estate tax assessment arrived, and it is $20,000.00 more than it was last year. We were right at $30,000.00 equity (my wife and I) after realtor fees before the new assessment came in the mail today.

Here's the breakdown:

$337,827.00 Taxed Value
-$268,986.98 Mortgage Payoff
-$23,647.89 Realtor Fees To Sell Home
-$30,000.00 Allowed Equity For Filing Jointly in Illinois
______________________________

$15,192.13 Over Limit

Does this mean we will be forced into Chapter 13? Are there any other options?

Also, I have another question. I do web design for a living, and my income is based on how many new website clients I get each month. One month I may make $9,000.00 gross sales and the next month I might make $7,000.00 or less. However, I have been averaging around $9,000.00 before business expenses (office expenses, T1 connection, subcontractor fees, referral commissions, etc.), resulting in about $72,000 a year ($6,000.00 a month) in net income - which is under the allowable $81,097 in Illinois with four dependents.

We only have one vehicle. So, other than the over-the-limit home equity, we qualify for Chapter 7. We need to unload about $70,000.00 in unsecured credit card debt and a $75,000.00 SBA loan that is secured with my business assets. We ran these debts up by trying to keep two full-time employees on payroll through the 2008 recession, but we ran out of money when my business sales dropped in half by the end of 2008.

Instead of laying off the employees, I took out the SBA loan and ran up the credit cards to make payroll until I realized that the business income wasn't recovering as I had hoped it would. So I let the employees go, moved out of my office, and have been working out of my home ever since.

We had a vehicle repossessed last year and my wife and I both need about $5,000.00 in dental work each, not to mention our kids. We probably have $100,000.00 equity in our home, but our tax assessment only shows that we have $69,000.00 in equity. We are also five months behind on our mortgage payment ($2,800.00 a month), but our mortgage company has been very lenient with us and we are paying $200.00 a month on the past due amount. They said as long as we pay the extra $200.00 per month, they will not push us into foreclosure.

We stopped making payments on all of our debt about a year ago, and all of a sudden all of our creditors are rushing to get judgements. Help! What should we do???

[daylate]

Just because the tax value went up, doesn't make the FMV go up. Talk to some realtors and see if you can get them to give a lower estimate based on current sales. Illinois is in big financial trouble this could just be a way to get more tax dollars and not be reflective of what you could sell for. How is the condition of the house? Wht are comparable houses selling for? Good luck.

[Pandora]

One month I may make $9,000.00 gross sales and the next month I might make $7,000.00 or less. However, I have been averaging around $9,000.00 before business expenses (office expenses, T1 connection, subcontractor fees, referral commissions, etc.), resulting in about $72,000 a year ($6,000.00 a month) in net income - which is under the allowable $81,097 in Illinois with four dependents.

You're basing off of net - dont believe you can do it that way.

CMI is defined as the average monthly household gross income received during the six full months just prior to your filing bankruptcy. The income you reported on your most recent federal tax return is not relevant to the means test- CMI counts only the last six months' gross household income. CMI includes gross income from all sources earned by everyone living with you including income of a non-filing spouse or other family member, regular gifts or assistance from family members, and gross income you actually received from a wholly-owned family business. (Business expenses are deducted elsewhere in the means test calculations.)

I agree with the PP - find out what FMV is by having a BPO or CMA done, however know that some trustee's can base value off of other means (i.e., county records). Also - how is it you're able to deduct "future real estate selling fees" from the value of your home? I'm not sure you can do that, but I could be wrong.

[daylate]

I think trustees look at the selling costs when trying to decide whether or not to take a property. Unless they can sell by "owner" they are going to have to pay some commission and it could make it not worthwhile for them to pursue.

[Pandora]

I think trustees look at the selling costs when trying to decide whether or not to take a property. Unless they can sell by "owner" they are going to have to pay some commission and it could make it not worthwhile for them to pursue.

Thanks daylate - see I learned something new .

Do have a question though - since IL has both tenancy by entirety and homestead - would it matter which way for BK purposes in figuring what exemptions are allowed?