Usually, debtors filing a Chapter 7 bankruptcy petition are allowed to keep the house where they live. However, mobile homes present an interesting twist on the definition of a house. Traditionally, the homestead exemption applied only to land that could be recorded at the local registry of deeds. If a mobile home is more or less permanently situated, it would still probably qualify as a homestead as long as the local registry of deeds could file a declaration for the property. However, mobile homes would otherwise be considered as non-homestead property, equivalent to a motor vehicle. Debtors over the age of 62 in Massachusetts can seek protection for their mobile home residence under M.G.L. c. 188, s. 1A, which applies the homestead exemption to “manufactured homes,” which would include all mobile homes. Debtors younger than 62 would have to make sure their mobile home is covered by the federal real estate and wildcard exemptions as their non-homestead property.
October 6th, 2010 by Administrator
A recent federal appeals court decision, U.S. Court of Appeals, 8th Circuit. Carpenter v. Ries, No. 09-2897. July 30, 2010. Lawyers USA No. 993-2148., reinforces a bankruptcy debtor’s right to retain an award of Social Security benefits. Section 522(d) of the Bankruptcy Code allows a debtor to claim as exempt “the debtor’s right to receive . . . a Social Security benefit.” However, the lower court had disallowed this exemption as the debtor received a $17,000 payment for retroactive Social Security disability benefits six months before his filing. These funds were segregated from other assets in a separate bank account. The 8th Circuit found that the exemption did not apply because this case did not involve a “right to receive” benefits, rather the benefits were already paid. On appeal, the court allowed the exemption as Section 407(a) of the Social Security Act “automatically and completely excludes social security proceeds from the bankruptcy estate, and not as an exemption provision which must be claimed by the debtor.”
September 13th, 2010 by Administrator
You need not lose your car if you are filing a Chapter 7 bankruptcy and getting a discharge of debts. If you are not keeping your home, you are allowed a car worth up to $3,450.00 using federal law exemptions. If you have more equity in your car, you might be allowed additional amounts unused under the wildcard exemption ($11,975.00 per filer). If you are keeping your home, you are allowed a car worth up to $700.00 using state law exemptions. Your spouse in a joint petition is also allowed the same amount for their vehicle. If there is a loan on the car, you would be allowed to keep the loan out of bankruptcy by reaffirming the debt. The bank will have you sign a reaffirmation agreement that even though you filed bankruptcy, you still wish to keep the car and continue paying the loan. As long as you have enough income before other expenses to make these payments, the reaffirmation agreement would be approved by the court. On the other hand, if you cannot afford your car loan, having your car repossessed and putting the loan into a Chapter 7 bankruptcy allows you to not be responsible for any loan balance still owed after resale of the vehicle.
This is not legal advice. It is just general information on filing bankruptcy. Please see a lawyer in your area if you have questions regarding your specific situation.
August 2nd, 2010 by Administrator
The short answer is – Yes, as long as you are current on your mortgage and are able to keep up with the payments. If the homeowner can afford the mortgage terms but cannot afford to pay off other debts, such as credit cards or medical bills you may be able to keep your house under a Chapter 7 case by filing a Declaration of Homestead which protects the interest in the house you live in up to $500,000 in Massachusetts. What this means is, as long as your home value is below $500,000 & payments current you can keep your home and still file bankruptcy to deal with other debts.
There are several scenarios and conditions that we should consider.
These days there are many who try a last ditch effort to stop a foreclosure by filing bankruptcy. Even if an emergency bankruptcy petition is filed, this only buys you more time before the bank gets around the automatic stay protection of bankruptcy to foreclose on the house unless you are able to refinance your mortgage, able to work things out with the bank and somehow come up with the balance owed. This would be your ideal, best case scenario and everything works out for all parties involved. Unfortunately, this is not as easy as it sounds. You can see my post here about how the foreclosure process works.
If the house does go to foreclosure, then a Chapter 7 bankruptcy discharge will protect the homeowner from having to pay the mortgage deficiency. This is why it is very important to take a look at your credit report as the bank may not immediately go after you for this balance, but wait until your financial situation is more secure and then try to collect the money owed. This scenario is possible if your house went to foreclosure or you had a short sale.
Like always, this does not constitute legal advice. It is just general information. If you think you need help, please contact a bankruptcy attorney in your area to address your specific situation.
August 2nd, 2010 by Administrator
While a Chapter 7 bankruptcy is a “no asset” case, people having an interest in real estate other than their personal residence (time shares and undeveloped lots) need not necessarily worry about losing such property. Massachusetts law allows an exemption for the value of the equity held in the debtor’s personal residence up to $500,000. People not owning their residence benefit from more liberal federal law exemptions which actually allow up to $20,200.00 worth of real estate to be exempted. An appraisal or other statement of value is usually filed along with the bankruptcy petition in order to verify the value of the real estate. Consult with a qualified bankruptcy practitioner in your jurisdiction before attempting to exempt real property in a bankruptcy filing, as the state laws on exempting such properties vary considerably from one state to another.
May 29th, 2009 by Administrator
