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Considering bankruptcy - some questions


Leme
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Helllo all,

I'm ~30,000 in unsecured debt, and am about to be the victim of a default judgment in a civil case of around $20,000 plus attorney fees. Even without the judgment I was thinking about filing for bankruptcy.

My current assets are my home, which was left to me by my mother, both my sister and I share ownership of the home. It was appraised last year at $148,500.

My questions are this ... If I do decide to file a chapter 7, do I get to keep my home? I'm in California and looking at the exemptions, I'm allowed $50,000 towards property I occupy, that of course doesn't cover my equity in my house or even half of it. Or do they force a sell of my home to pay back creditors?

What about my car loan? I'm current on it and have never been late. As far as my unsecured debts, I just started to fall behind and have been making minimal and not so minimal payments for the last two months.

As far as my income, I make around $38,000 a year. Would a chapter 13 be a better solution? I'm a bit leary about going that route and having the court garnish a large portion of my wages and then having trouble makeing ends meet.

I plan on doing some research and asking questions on places such as this before consulting a local bankruptcy lawyer.

Has anyone here been in the position I am in before in a Chapter 7? Where you owned a home outright with no mortgage? If so, what happened to your home?

Thanks in advance,

Joe

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If you own a home outright, then they will probably force the sale of the home. However you mentioned that your sister also own part of it so speaking to a BK attorney will be the best thing to answer that question.

First consultations with Bk attorneys are free so visit 2 or 3 or 4 attorneys.

Your car loan will depend on what you owe vs what is the current market value. For us it was a wash, we owed what it was worth so we keep the car.

If you get a default judgement for that amount of money and they find you own a home outright that could pose a problem. If you transfer to deed to your sister so she has full ownership then it is not, but if you file BK soon after that then that will not fly with the BK courts.

So best advice is to speak to an attorney pronto.

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Big question about the house. How is the house deeded ? Is it 'tenancy by entirety' , you AND your sister or you OR your sister. Makes a big difference. If its tenancy by entirety or an AND situation, they could NOT force the sale of the home as it takes BOTH parties to sell the property, the Trustee could NOT force the sale w/o your sister also losing her half - or your sister would have to be paid her half by the Trustee, PLUS pay you the 50K exemeption amount. Now you're talking a LOT less gain for the Trustee. If the deed is an OR situation, THEN you have a problem. The judgment creditor could go after it and so could the Trustee.

You may, in fact, end up in a Ch 13 because of 100% equity, of which your 1/2 share in it is still beyond the homestead exemption.

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Big question about the house. How is the house deeded ? Is it 'tenancy by entirety' , you AND your sister or you OR your sister. Makes a big difference.

The deed states both my sister and I. It's not handy at the moment so I'm not sure of the exact phrase.

One last option is to simply sell the house without going into bankruptcy. Doing that, paying everything off free and clear and just forgetting about the bankruptcy would most likely make the most sense long term. The only downside to this is family members upset with me selling the property due to sentimental attachments to the land. However, I'm sure my sister could use the money from the proceeds to put towards a down towards a new home for her family and of course, it helps my situation by keeping the negatives of a bankruptcy off of my report. The recent lateness on paying my unsecured cards is fixable.

I guess it comes down to the process of being able to put my mind in the right state about starting either process.

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