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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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1. I am planning to file chapter 7. I rent a room and work

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1. I am planning to file chapter 7. I rent a room and work in california but own property in washington state. If i move to washington state, how long must i reside on the property I own before I can claim it as my principal residence to avoid losing it in chapter 7?

2. Is there any way I can continue to work in california but claim my washington property as my principal residence?

3. The aforementioned property in washington state is land property with no 'fixed' home. It has a mobile home on it. Does this matter for principal residence purposes?
Hi JACustomer,
1) There is no minimum amount of time a debtor must be in his residence before being able to declare that residence as his homestead. If you moved to Washington from California tomorrow and filed the next day, the Washington residence would be the homestead. However, you have to live in Washington for 2 years before you can use the Washington exemptions. Before that time, you have to use the California exemptions.
2) Where a debtor works has absolutely no bearing on the Bankruptcy procedure, so yes, you can live in Washington and work in California.
3) If you live in the mobile home, that would be considered to be your homestead.

Edited by Christina Fortunato, Esq. on 7/6/2010 at 8:33 PM EST
Customer: replied 7 years ago.
Thank you so much. I'd be happy to increase your fee if you could assist me in the clarifying these final questions:

1.There is a lien holder on the property to whom I owe approx. 40% of the properties current value, leaving me with 60% percent of the current equity. Assuming there is no homestead exemption, would the property still be at risk of being seized or would it be protected because there is a 'secured creditor'?

2. Just confirming that I can file Chapter 7 in Washington State with no fixed length residency requirements (understanding that I must take California's exemptions if less than 2 years) and claim my property as a homestead, also with no fixed length residency requirements. As you said, I could move onto my property in Washington tomorrow, file a homestead on my property and then file bankruptcy the following day, all while continuing to work in California?

3. Can I continue to rent a room in California (since I work here) without that interfering with my homestead abilities?

Thank you very much.
How much is the 60%?
Customer: replied 7 years ago.
I owe $30,000 to the lien holder and the current value of the property is approx. $100,000. I would be discharging approximately $40,000 in credit cards/ auto loans through chapter 7.
What is the basis for the lien? Is it a loan secured by the property, or something else?
Customer: replied 7 years ago.
I'm not sure if I mis-spoke when I said lien holder, the property is an owner-carry. I purchased it from the owner approx. 6 years ago and I make payments directly to him. There are no other liens or loans of any kind against the property...
1) If there were no homestead exemption available for the Washington property, it would be taken by the Bankruptcy court.
2) Yes - if you officially move to Washington, you would be filing in Washington, but using the California exemptions - which allow a $75,000 homestead exemption.
3) The operative word is "domicile". To be able to use a homestead exemption, the debtor must be "domiciled" in the homestead that is being claimed. If you work in California and rent a place to stay while you are working, and then return to your Washington domicile weekly, that should be okay. However, if you are living in the California rental, and visiting the home in Washington irregularly, it might be hard to convince a Bankruptcy trustee that the Washington residence is your "domicile".
Customer: replied 7 years ago.
Thank you. I just spoke with my father who currently resides on the property, and he stated that the appraised value may now be closer to $50,000 rather than $100,000. I'm just assuming, since $50,000 wouldn't be enough to cover my discharged debt after paying the lien holder $30,000, that this would reduce the chances of the property being seized given no homestead? Last question I promise.
The fact that the property is worth only $50,000 instead of $100,000 does make it less likely that the Bankruptcy trustee would take it. However, you can definitely still assume the trustee will take it if the equity is $20,000. If there is not enough to pay creditors in full, the trustee distributes the proceeds in a pro rata manner, after taking 10% for himself.

Edited by Christina Fortunato, Esq. on 7/6/2010 at 10:32 PM EST
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