Use Exemptions In A Bankruptcy Filing To Protect The Family Home

With the high amount of foreclosures reported over the last couple years, many Americans are looking for any way possible to protect their home. As property values continue to plummet people just don't know what to do. Individuals that cannot afford their payment are going to the bank with idea that a loan modification might be the answer they need. The dirty little secret that the banks aren't telling is that only about 5% are approved. The banks got bailed out in 2008 with TARP and in 2009 with QE2 and yet they're not willing to cut loose with any of the money the government gave them. The last thing that most good working people want to do is to file for bankruptcy, but after trying everything that is about all they can do to protect their home from foreclosure.

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Protecting a house in a bankruptcy filing is based on the state's exemption laws in which the property owner resides. Depending on the state, most houses would be protected when filing bankruptcy with the exception of the owner having a large amount equity.

A bankruptcy exemption is a fixed dollar amount and with the fluctuation of the real estate market it is tough to give a true value. In most bankruptcy cases an individual can give a rough idea of the value and they'll be fine. Every now and then a person will get a bankruptcy trustee that will contact a real estate agent or broker that throws out some crazy price. This can put the debtor in the situation of the trustee seeing a non exempt amount and deciding that it's in the best interest of the creditors to sell the property and give the debtor cash back on the amount of their exemption. The reason most debtors go into a bankruptcy filing is to protect their property and not lose it. They don't file bankruptcy even thinking that the trustee might sell the family home.

This is another reason why a bankruptcy attorney is of utmost importance when filing for bankruptcy. Recently, there was a court ruling that encourages a debtor to state the full market value to trigger a 30 day deadline for the trustee to object on the amount. If the bankruptcy trustee does not object within the 30 day timeframe the debtor will have full protection from losing their home.

If for some crazy reason the trustee does file an objection, the court could rule that the property is worth more than the exemption and your bankruptcy attorney will just have to figure out what other exemption to use so you won't lose anything.

Usually, with the amount of people filing bankruptcy these days, the trustee won't object in time, or the objection will be just outright denied. The objection will be denied by the bankruptcy court if the judge agrees that your estimated value of your property is within the exemption laws.

Nowadays, not many people have a lot of equity in their home. Bankruptcy trustees also know that the real estate market is soft and trying to seize a piece of property to sell it and make a few bucks sometimes cost them more in the hassles and time than it's worth. When filing bankruptcy and trying to protect as many family assets as possible, it's a no-brainer to hire a bankruptcy attorney that will fight for you.

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