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California bankruptcy exemptions can save your house.

California Homestead Exemption

California Homestead Exemption

Chapter 7 bankruptcy is liquidation; the bankruptcy trustee can take your stuff. They don’t take the shirt off your back, but at some point they draw the line regarding what you can keep. These are the bankruptcy exemptions, and each state has its own. The California exemptions include a way to protect some home equity. This is the California homestead exemption.

There are two sets of California bankruptcy exemptions. Bankruptcy attorneys call these the 703s and 704s. The California homestead exemption is found in the 704s, at California Code of Civil Procedure 704.730. There isn’t just one homestead exemption in California, but three.

The Three Homestead Exemptions in California

The California homestead exemption can save your house.
Don’t risk losing your house in Chapter 7. Talk to a experienced bankruptcy attorney about the bankruptcy exemptions and homestead exemption in California.

Firstly, there’s the bankruptcy exemption that a single homeowner gets. This is in subsection (a)(1). In 2018, a single person who lives in a house gets to protect $75,000 of home equity under the California exemptions.

Secondly, there’s a higher California homestead exemption for a married person’s residence. This is in (a)(2). The California homestead exemption for a married person is $100,000.

Finally, if you can tick one of three boxes, you get the superduper $175,000 homestead exemption in California’s bankruptcy exemptions. To level-up and qualify for this, you have to either be:

  • 65 years old;
  • have a disability that prevents gainful employment; or,
  • 55 years old, and make below a certain income level that changes from time to time

This may seem simple, but what is “disabled?” What is “as a result of?” What is the income level, and which time period is measured? You’ll want to speak to a qualified bankruptcy attorney in your area. But in the right circumstances, someone filing consumer bankruptcy can protect a lot more house equity under this third option.

Spouses Sometimes Count

A final note: a good thing about, in particular, the $175,000 California homestead exemption is that it extends to the spouse of the person filing Chapter 7. So if the debtor is, say, 63 years old, but their husband is 67 but really doesn’t want to file bankruptcy, the 63 year old who does file Chapter 7 bankruptcy gets the $175,000 homestead exemption in California anyway.

Be careful in Chapter 7 bankruptcy.  It’s not always the best type of bankruptcies.

Learn the differences between Chapter 7 bankruptcy vs 11 vs 13.

 

 

You really should talk to a qualified Los Angeles bankruptcy lawyer, as you get what you pay for, and it’s not worth risking your home.

save home

Chapter 13 can Stop House Foreclosure

Chapter 13 bankruptcy can Stop  House Foreclosure

Save your Home and Catch up on the Mortgage

by Hale Andrew Antico, Esq.

In August 2005, just before the bankruptcy laws changed, I wrote in this space that there was a perfect storm brewing for the average consumer.  Since then, the bankruptcy laws have changes (in the name of reform), and indeed, it is harder — but not impossible — to get a fresh start.

One area where we can get into debt trouble and feel a financial squeeze is with regard to mortgage payments.  The past few years, property values have been soaring here in Southern California.  This has led to many people to refinance their homes and take “cash out” — in essence using their house as an ATM.  The result of this is that it leads to less equity and a higher mortgage payment.

What happens if these homes with tapped out equity drop in value?  We’re conditioned to believe that property values only go up Up UP! in Southern California.  However, in 1989-1991, the real estate market peaked, leading to dropping property values.  The result is that many people were “upside down” in their homes, meaning that that they owed more than it was worth.  We expect this from a car loan since a car almost always depreciates faster than we can pay it off.  But with a house?  Yikes.

Some experts believe that history may be repeating itself. Recently, economics experts are looking at reliable benchmarks like Price-to-Income Ratios and Price-to-Rent ratios and noting that home value are much higher than normal levels.  Even houses in your neighborhood are no longer selling within the same week they’re listed with someone offering $10,000 over the listing price.  Instead, we’re seeing “Reduced!” signs nailed onto those For Sale signs, and reading advice like that in the Los Angeles Daily News suggesting that you list your home in the lower 25% as related to the comparable homes in the neighborhood.  Is there a real estate bubble which will shortly burst, or is the housing market temporarily resting before it continues upwards and onwards?  No one knows for sure.

If you find yourself in the awful situation where you fall one or two payments behind on the mortgage, there is still hope to stop foreclosure.  A Chapter 13 bankruptcy might be the solution.  This option allows you to get some “breathing room,” stop the collection calls and headaches, and even stop a foreclosure.  People can fall a few months behind, they want to catch up but the lender won’t accept anything but a massive lump sum payment that the troubled homeowner doesn’t have.  A Chapter 13 case can allow you to catch your breath as you demonstrate how you will catch up on your past due mortgage payments, but on a schedule you can actually stick to and afford.  This very helpful type of bankruptcy allows you to reorganize your debt and save your house in Southern California and stop foreclosure.

Even for people who don’t have a home, a Chapter 13 bankruptcy can provide a light at the end of the tunnel.  It can provide a way to pay what you can afford, and in return, stop lawsuits, wage garnishments, collection headaches and yes, even foreclosures. And then, yes, you can be debt-free in three or five years.  That time will tick off the calendar either way… why not be out of debt in that span?

So, just because you’re a payment or three behind on that car or home and don’t think you can stop the house foreclosure, don’t lose faith.  There is a way to get some space and time to catch your breath.  You can be out of debt and most importantly, save your home.  Sometimes, bad things happen to good people.  We don’t intend for things to work out the way they do.  But when “life happens” and there is an unanticipated debt problem, when you’re ready to solve it then a Chapter 13 bankruptcy can be the solution to your problem.

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Hale Andrew Antico (aka Attorney Antico) is an attorney who specializes in consumer finance.