Sign in to follow this  
DodgeRam

Chapter 7

Recommended Posts

I live in the State of Wisconsin. It appears Wi allows both spouses a $75,000.00 home stead exemption "each". Who gets paid first? Do secured creditors (mortgage) get paid first?

 

 

Share this post


Link to post
Share on other sites

Any mortgage will get paid before your exemption. If you notice on the forms, you have to fill in the value after any secured liens on the property. That value is where your exemption comes from. It would be the same if the trustee did not sell the home with the lien and allowed the bank to foreclose after the bankruptcy was closed.

Also, this is the same for judgements. If an unsecured creditor put a lien on your home after a judgement and sold it, the money would first go to pay the expenses to sell the property, pay off the first lien, pay the exemptions, then pay on the judgement. That is why most creditors wait until you sell to exercise the lien.

Share this post


Link to post
Share on other sites

Not sure I unjderstand either the question or the answer...but...

 

In Ohio,, that would mean that both you and your spouse are allowed $75k (total of $150k) equity in your house before the trustee would seize the asset (i.e., the house) to pay other creditors.  Of course if you have a mortgage on the house, and you include that in the BK, then the mortgage holder can foreclose.

 

And, if there are no other liens or judgements in effect before the BK, an unsecured creditor cannot put a lien against the property once the BK is filed.

Share this post


Link to post
Share on other sites

I have my answer, thanks...  I was after the pecking order. Who decides the value of the homestead? Does the trustee have to sell at FMV in an arms length transaction? What is the trustees obligation?

Share this post


Link to post
Share on other sites

You're asking questions that need to addressed by your BK lawyer.  Different states, different trustees, different courts deal with such things differently.

 

But...unless you own the house outright, the trustee will not sell the property.  The mortgage holder will foreclose and it is highly unlikely they will sell the house for more than the balance...therefore, your equity is zero.

Share this post


Link to post
Share on other sites

This OP might be doing this pro se and hence, came to us for an answer. We however can give a general answer as each area is different.

Generally, on the forms, you put down the value that you can back up. If you have an assessors value, you can use that. If you have the opinion of someone in the real estate profession, you can use their determination. You can also look for similar properties for sale in the MLS to decide the value. You might not have to use the arms length determination if the trustee is smart enough to know they will not get that much. This goes for all assets, not just real estate. When I went through BK, for a coin collection, I used the dealers blue book which is what a dealer would buy the collection for. The trustee did not even flinch. The trick is to make sure you can in good faith back up that value.

As for sale, Willing is correct. If there is nothing for the unsecured creditors, the trustee will abandon the property and let the bank foreclose. If after expenses and the mortgage, there is something left (very doubtful in this age), then the exemptions come to play and you get whatever is left over.

Share this post


Link to post
Share on other sites

That depends.  I practice in two districts.  In one district, we must send to the trustee at least an online appraisal from realtor.com, zillow, etc.   Or they'll accept a CMA (competitive market analysis) if I am tight on exemption and I have the client secure one from a realtor.  Of course, an actual appraisal is much better.  In the other district, a recent appraisal is REQUIRED. 

 

In both districts, recent mortgage statements and the deed are also required to be submitted.  And sometimes, they'll request the full mortgage paperwork which I can usualy get at the Recorder of Deeds.

 

Your district may be similar, but no one knows for sure unless you ask an attorney or the trustees office.

Share this post


Link to post
Share on other sites
Guest
This topic is now closed to further replies.
Sign in to follow this