Homestead exemptions is it equity or value?

[atvbutterfly]

In chapter 7 is the $125K cap of the homestead exemption on the value of the property or the equity you have in the property?
My understanding is that the fed law overrides even the state exempt laws regardng this. Is that right?
I purchased my home 2 yrs ago, it is worth $155k - when I file bankruptcy what happens to my home. I want to keep it. I am not behind on payments.

[HHM]

You are misunderstanding that particular part of the code. The federal law does not provide for a $125K exemption on equity, it LIMITS the exemption that can be claimed. So, take a state like Florida with an unlimited homestead exemption, the federal law only allows the Florida debtor to claim no more than $125K in equity (under certain circumstances) notwithstanding the fact that Florida allows for an unlimited equity exemption.

But generally, homestead exemptions cover "equity".

[justbroke]

I was going to add something, but in order to not get into complex issues over equity, the Federal homestead "cap", and Florida, I'll just say that HHMs explanation is on point.

[atvbutterfly]

All that is good to know, thanks for clearing it up.
I also have a 2nd home - investment prop. that will be empty by the time I file the tenants will be gone. I don't want to keep it, and I just missed the June payment. What will happen to the prop. if I file Chap 7 now? Should I wait and try short sale?

[justbroke]

All that is good to know, thanks for clearing it up.
I also have a 2nd home - investment prop. that will be empty by the time I file the tenants will be gone. I don't want to keep it, and I just missed the June payment. What will happen to the prop. if I file Chap 7 now? Should I wait and try short sale?

You'll want to surrender the investment property in Chapter 7. Does it have any equity? I guess not, if you're asking about a short sale. If you surrender it in the Bankruptcy, no need to worry about short sales or deed-in-lieu deals.

[atvbutterfly]

You'll want to surrender the investment property in Chapter 7. Does it have any equity? I guess not, if you're asking about a short sale. If you surrender it in the Bankruptcy, no need to worry about short sales or deed-in-lieu deals.

Just Broke, I surrendered the prop. in BK which was discharged in Jan '10. Yet the Bank has not taken possession, rather placed a lien and I am still liable for taxes, upkeep etc. What should I do now, the county is breathing down my neck.??

[justbroke]

Just Broke, I surrendered the prop. in BK which was discharged in Jan '10. Yet the Bank has not taken possession, rather placed a lien and I am still liable for taxes, upkeep etc. What should I do now, the county is breathing down my neck.??

You don't pay the property taxes. You allow the County to force the sale of the taxes and create a tax certificate. The lender (creditor) will need to deal with that, or they will lose the property in a tax foreclosure in 2 years after the tax certificate is issued.

I'm assuming this is that investment property. If so, you do need to maintain it so that it's livable and you don't incur "city" or "county" violations that have a fine associated with them, since those are personal liabilities. Otherwise you can ignore the taxes. Since you're in Florida, you're not responsible for 12 months of HOA dues/fees (or 1% of the mortgage balance), whichever is less.