Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here.
The bankrutpcy court looks at it this way:
Son and mom each own 1/2 of the equity. Contribution does not come into play.
So, take the value of the home, subtract liquidation costs (roughly 3-6%) then subtract mortgages.
Divide the remainder by 2. That figure then represents each owner's share of the equity.
The court can liquidate the property to get to son's share.
Or the mother can refinance to pay the trustee the son's share.
There is no exemption at play here.
The trustee can get to the son's equitable portion of the property and either force the sale, paying mom her share, and using the remainder to pay his creditors, or selling it to mom (who can usually refinance with court permission to get the cash to pay the trustee).
The other alternative is for the son to convert to chapter 13 to pay back that same amount of the equity to his unsecured creditors over the next 3-5 years to protect the asset.
Did you have any further questions?
Okay. So the mom would get her own $30,000 homestead exemption and she has another son who lives there. Could he get a $30,000 homestead exemption as well? That would give them a $60,000 exemption.
she doesn't get a 'homestead' exemption
it is available to the debtor
and he used his in utah
there are no exemptions to use for the other owners
and second son, if he's not on title on the date of filing, has no impact here either
value - costs of sale - mortgages = equity. 50% to mom, 50 % to son. trustee can liquidate son's portion
that's the equation. no other factors
Peter, did you have any other questions?
yes, I don't understand why the mom can't get a homestead exemption
mom didn't file bankruptcy, that's why
debtors get exemptions, not non-filers.
If she was filing, she would get it
but Utah Code 78B says all home owners get the exemption even if she didn't file a bankruptcy
her share of the equity is protected with the homestead
not the son's share
exemptions would go to that person's share.
So mom's 50% equity would be protected by homsetead if she was filing or if her creditors were trying to get to that equity
her homestead has no impact on the son's share of the equity
do you follow?
Understood, but her homestead does protect her $30,000 share right?
protects her share of the equity, sure, but the bankruptcy court doesn't even bother with that,
so it has no impact on the calculations ehre
I think I see what you are saying
the house has $100,000 in equity. The son is entitled to $50,000 of that
so the mom's homestead of $30,000 doesn't exceed the $50,000 that's hers anyway.
she keeps here share either way, exemption or not. yes
so the court will only go after the $50,000 that's his equity. Her exemption won't be a factor here
best of luck to them
DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.
The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).