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CA has a homestead exemption in DB's case that will protect upt to $100,000 of his home. DB could keep his home even though there is $86,000 of equity during and after his CH 7 Bankruptcy proceedings are over. 704.730 - Real or personal property occupied at time of filing for bankruptcy, including mobile home, boat, stock cooperative, community apartment, planned development or condominium, up to the following limits: $75,000 if single and not disabled; $100,000 if family and no other member has homestead; $175,000 if 65 or older or if physically or mentally disabled; $175,000 if creditors are seeking to force sale of your home and you are either (a) 55 or older, single and earn under $25,000 per year, or (b) 55 or older, married and earn under $35,000 per year. Sale proceeds are exempt for up to 6 months after sale.
704.920 - Homestead declaration may be filed to protect the proceeds of a voluntary sale up to 6 months or to protect the exemption amount from a judicial lien.
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If I understand it, DB will be exempt completely of the property taxes $17K and the EDD fines $18K and owe nothing after he receives his BK discharge?
Not exactly, the equity in his home will be exempt. However, government debt is not dischargeable.
How does BK Court protect or ensure DB's $100,000 exemption and pay the $35,000 debt? The only way DB would be able to pay it is a forced sale of his home. He was hoping that the trustee would handle the sale of his home before the county tax collector does.
The trustee could sale his home to pay the tax debt or not. It really depends on the trustee. The $86,000 in equity that could potentially be made on teh sale of the home will be exempt. However, DB will still be liable for the tax debt.
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