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Attorney T. Lodge
Attorney T. Lodge, Attorney
Category: Bankruptcy Law
Satisfied Customers: 45
Experience:  10+ Years Experience Chapter 7 and Chapter 13 Attorney
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My Husband (we are separated) has been out of work for some

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My Husband (we are separated) has been out of work for some time, he as mounting debt and hasn't paid mortgage for months ( i have been covering this). If he is declared bankrupt am I going to lose the Townhouse we own in both our names??
Submitted: 8 years ago.
Category: Bankruptcy Law
Expert:  Attorney T. Lodge replied 8 years ago.
Typically, in most all states a debtor in bankruptcy is allowed a homestead exemption that says that his or her equity in their primary residence is considered an "exempt asset" .

The exact amount of equity able to be considered exempt depends on what state your husband is in. Most states allow debtors to take the "Federal Exemptions" which typically allow for the exemption of up to $ 20,200.00 worth of equity.

For example, if the townhouse is worth $ 200,000.00 and he owes $ 180,000.00 on his mortgage, then he is sitting on $ 10,000.00 worth of equity in the home (His 50% share). Under the federal exemption, he would be able to exempt this entire amount. Therefore, he would keep the home as the trustee in the case would have no ability to seize the asset under these circumstances. On the other hand, if the townhouse is worth $ 200,000.00 with a mortgage of $ 80,000.00, he would theoretically have $ 60,000.00 in equity (again, his 50% share). Since the maximum exemption under FEDERAL law would be $ 20,200.00 (assuming a state where the state exemption is lower or does not exist), he would have approximately $ 38,800.00 in UNEXEMPT equity. In this situation, if he wanted to receive his bankruptcy discharge, the trustee could possibly take ownership of his interest in the townhouse and try to force a sale.

Bear in mind that he has certain rights in bankruptcy that may or may not adversely affect you. You are best off retaining local counsel to consult further on this matter to protect your interests.

Good Luck.
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