Oh oh. Does anyone know what this means?

[Miknan]

Not if the mortgage is found to be invalid.

Hmmm, that's very interesting. My wife and I filed jointly. I wonder what the federal homestead exemption is? I'll have to bring this up to my lawyer for sure. Thank you very much for the suggestion.

[iv65536]

Hmmm, that's very interesting. My wife and I filed jointly. I wonder what the federal homestead exemption is? I'll have to bring this up to my lawyer for sure. Thank you very much for the suggestion.

$21,625; of which up to $10,825 may be used as a wildcard. The exemptions may be doubled if married and filing jointly. §522(d)(1), §522(d)(5).

[Miknan]

So I could live here for free for a year or so then possibly get $43k in exemption money when the house sold? Go trustee!

[iv65536]

Entirely possible but check with your attorney on this possibility.

You may have a situation where the creditors are divided against themselves - sharks eating sharks.

[justbroke]

The fact is that in Florida, the banks have been... well.. "working" with the Trustees in Chapter 7 cases. It was recently discussed at a conference for bankruptcy attorneys that Trustees and banks are agreeing to allow the Trustee to "sell" the property to the bank once the Debtor claims the unused homestead exemption! It makes it MUCH EASIER for the bank to foreclose on the property since the Trustee can actually sell property "free and clear of liens" in bankruptcy. That's the ultimate "clean title" if you were to ask me.

I had read this article just about 2 weeks ago. It details what I'm talking about. I don't think it's as widespread as the article seems to lead one to believe, but it certainly has that sort of hoopla about it.
For sale: underwater homes in Orlando bankruptcy court – banks get them cheap

(Reminder, this article is related to Central Florida and not the general Trustee attitude towards underwater property in other States... or even across Florida!)

[IamOld]

Just Google the original meaning of fascism ...

[ValleYum]

So I could live here for free for a year or so then possibly get $43k in exemption money when the house sold? Go trustee!

Well, you would only get the $43k if you did not use any of the homestead exemption as wildcard(s) to protect other assets.

But even if you used the full amount of the homestead wildcard on other assets (like the land you own with your siblings) - there is still $10,800 left that you and you wife can each apply to your homestead for a total of $21,600.

It is still a nice chunk of change!

[Miknan]

Maybe I don't understand what exactly the homestead exemption is. Isn't that equity where you live? We thought the house was upside down so we weren't getting anything from that. That vacant land we inherited is pretty much worthless. The trustee already did that no asset letter. The lawyer said she was leaving the land alone. I actually wouldn't mind if she sold that too. I would of got like $3k for it.

[AngelinaCat]

Just Google the original meaning of fascism ...

LOL Now you sound like someone else we hold near and dear....

[IamOld]

LOL Now you sound like someone else we hold near and dear....

:-) Pray do tell... :-)

[btbeme]

I say give 'em all swords and lock them in a room and see who comes out.

In this economy, methinks any survivors will be mortally wounded anyway.

Let the banks and trustees club each other. All I know is that, believe it or not, I am getting a check for $20,000 to leave the house I have not paid on for 19 months. Yep...the bank is paying me out so I won't strip it clean and the short sale will go through. Funny thing is, we moved 45 days ago into a slightly larger house in a better neighborhood, only a few blocks away, and are saving $1000 a month.

If you get a big check from the sharks eating the sharks, I am all for it. After all, it is your tax money (and mine, and ACat;s, etc) just coming back around.

[ValleYum]

Maybe I don't understand what exactly the homestead exemption is. Isn't that equity where you live? We thought the house was upside down so we weren't getting anything from that. That vacant land we inherited is pretty much worthless. The trustee already did that no asset letter. The lawyer said she was leaving the land alone. I actually wouldn't mind if she sold that too. I would of got like $3k for it.

When you own a home and you have equity in it, that equity is an asset. Bankruptcy exemptions cover assets. The homestead exemption covers the asset of equity in your home. The Federal bankruptcy exemptions (which you can choose to use in Michigan) allow you to use a set dollar amount of the homestead exemption (if you haven't already used it to cover home equity) as a "wild card". This wild card is usually the reason debtors choose to use the Federal bankruptcy exemptions.

The set dollar amount from the Federal homestead exemption that you can use as a wild card is currently $10,825 each for both you and your wife (total $21,650). Your attorney could have used this wild card to cover more than one asset. Examples of the kind of assets he may have covered would be: the vacant land, money in a savings or checking account, your 2011 income tax refund or a car that had more equity than the automobile exemption allowed, etc.

You and your attorney may have not worried about listing a homestead exemption since you were 'upside down' in your mortgage. But if the Trustee prevails and your mortgage is invalid, the Trustee will sell your home. So now it is really important to make sure that a homestead exemption is in place on Schedule C for the maximum amount that you have available to you. Doing this will mean that you will get your legal share of any sale proceeds.

Your attorney needs to make sure that either he put (or amend your petition to do this!!) the $10,800 you and your wife are each entitled to (total $21,600) on your Schedule C for the Federal homestead exemption. Your attorney should also put any of the remaining wild card amount that you did not use on other assets in order to fully maximize your homestead exemption (and the money you will get when the house sells).

I hope this helps you understand a little better. Double check all of this with your attorney for sure since I certainly am not one!

How awesome if you can walk away from this without a foreclosure and with a little money in your pocket!! Good luck and please give my best to your wife!! I hope she is doing better!

[Miknan]

Finally heard back from my lawyer on this today. I asked him if we could amend the schedule C to include a homestead exemption if the mortgage is invalid and the trustee sells the house. His response, "No, exemptions cannot ever beat out the Trustee's rights to set aside a mortgage.". . It was nice to dream though. Part of me thinks I should ask somebody else. I kind of feel this attorney hasn't worked too hard for me.

[HighUnder]

I say give 'em all swords and lock them in a room and see who comes out.

In this economy, methinks any survivors will be mortally wounded anyway.

Let the banks and trustees club each other. All I know is that, believe it or not, I am getting a check for $20,000 to leave the house I have not paid on for 19 months. Yep...the bank is paying me out so I won't strip it clean and the short sale will go through. Funny thing is, we moved 45 days ago into a slightly larger house in a better neighborhood, only a few blocks away, and are saving $1000 a month.

If you get a big check from the sharks eating the sharks, I am all for it. After all, it is your tax money (and mine, and ACat;s, etc) just coming back around.

Wow, $20,000.00 to short sell and leave...that is awesome!

[ValleYum]

Finally heard back from my lawyer on this today. I asked him if we could amend the schedule C to include a homestead exemption if the mortgage is invalid and the trustee sells the house. His response, "No, exemptions cannot ever beat out the Trustee's rights to set aside a mortgage.". . It was nice to dream though. Part of me thinks I should ask somebody else. I kind of feel this attorney hasn't worked too hard for me.

I hope justbroke, LadyInTheRed, HHM or Des sees this thread and weighs in... That just doesn't sound right.