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TJ, Esq.
TJ, Esq., Attorney
Category: Bankruptcy Law
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Experience:  JD, MBA
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I am single and own a house with 150K equity, a car 7k value.

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I am single and own a house with 150K equity, a car 7k value. My income salary is 90K/year. I also have 170k debt credit card. Can I qualify for bankruptcy chapter 13.

I also have a lawsuit from a bank credit card for 40k debt. Can I file a bankruptcy before they can lien it to my house?

Thanks
John
Hello and thank you for allowing me the opportunity to assist you.

Assuming your secured debt (e.g., mortgage) does not exceed $1,149,525, and your unsecured debts (e.g., credit cards) do not exceed $383,175, then you qualify for Chapter 13.

Yes, you can file the bankruptcy prior to a judgment being granted, and the lawsuit will have to be dismissed. If you wait to file after a judgment is granted, then you'd need to be quick because in some cases liens are automatic as soon as the judgment is docketed by the court clerk. If you were to file bankruptcy within 90 days of the judgment lien, then you could avoid the lien because it would be considered a preference. The lien can also be avoided if it interferes with your homestead exemption. So, you do have options to eliminate the judgment lien if necessary.

Does that answer your question? Please let me know if you need clarification, as I am happy to continue helping you until you are satisfied. Also, your positive feedback is much appreciated. Thank you for using our service!

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Customer: replied 3 years ago.

Hi,


 


Someone say that I have a lot equity ($150-$170) in the house. In chapter 13, the court will ask to pay back to creditors.


 


The limit equity can keep for single is 100K and a couple is 150K. Is that correct?


 


Thanks


 


 

Hello again. Thank you for writing back.

In general, a single homeowner may exempt up to $75,000 of the equity in his home. But you may exempt $100,000 if you live with a family member, and $175,000 if you are 65 or older (or physically or mentally disabled). There is no doubling of the exemption for married couples.

It is true that the non-exempt equity must be paid to the Trustee during the life of the Chapter 13 Plan. The longest a Plan can last is 5 years. So, assuming you qualify to exempt $75,000 of equity, and your house has $150,000 of equity in it, then you must pay the Trustee $75,000 over 5 years (i.e., $1,250 per month).