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Ask Brent Blanchard Your Own Question
Brent Blanchard
Brent Blanchard, Bankruptcy Attorney
Category: Bankruptcy Law
Satisfied Customers: 1975
Experience:  Twelve years experience in all aspects of debtor & creditor BK.
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I am a New hampshire resident who boght a condo in N. Ft Myers

Customer Question

I am a New hampshire resident who boght a condo in N. Ft Myers FL in the last year. In 5/08 I was in a near fatal car crash
Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  Brent Blanchard replied 6 years ago.
Thank you for choosing

I see from your post that you were in a near-fatal automobile accident in May of 2008, and about a year later (last year, 2009, no month stated) bought a condo in the thriving town of North Fort Myers, FL. It appears that you are a resident of New Hampshire.

I don't see an explicit question, but since the localized elements of what assets are "exempt" in bankruptcy always limits houses to the one the debtor lives in, I can tell you that if there is any "equity" in the condo, the bankruptcy Trustee will be very interested in taking that condo and selling it for the benefit of the creditors.

If you want to keep the condo and it has equity, you would need to move to Florida, file in the FL BK District nearest, but current BK law would require you to use the exemption scheme of NH.

If you want to keep the condo and the loan is "under water", you could just re-affirm on the debt. The lender would be delighted, and it is very rare for anyone to care about that type of event.

All this presupposes a Chapter 7 liquidation case, the most common consumer BK. In a Chapter 13, it would be almost unheard of for a debtor to be allowed to keep a condo that is NOT the primary residence, when the loan is under-secured. Chapter 13 involves a 5-year repayment plan, and keeping a non-residence property would only drain the monthly budget to the disadvantage of other creditors.

I do not see how the prior car wreck would be relevant to anything happening in a bankruptcy case. The BK Trustee and the creditors only care about the "reason" for filing BK if it is somewhat bogus, such as deciding to quit a well-paying job to become an impoverished underwater basketweaver.

Thank you.


Edited by Brent Blanchard on 11/9/2010 at 1:07 AM EST
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Customer: replied 6 years ago.
Expert:  Brent Blanchard replied 6 years ago.
Even if the Terms of Service here allowed me to give you personal legal ADVICE (see Paragraph 7), it would be malpractice for me to pretend to make a recommendation on where to move without looking at your entire financial situation. It usually comes down to a decision of which situation stacks up better in costs and benefits--the dollars involved.

The 2005 amendments to the bankruptcy code prevent "shopping" for a state that lets the debtor keep more stuff than the debtor's former state of residence. This is by making the debtor use the former state's list of exempt property, and dollar values for that property, even though the case was filed in new state.

For example, the NH exemption list (scheme) allows a homestead exemption of $100,000 of equity (barely reasonable in my opinion) but a less generous exemption for a car of only $4,000. These numbers are different from state to state, and some types of assets are exempt in some states but not in others.

One house, one car. If the house is worth, say, $110K after deducting all loans against it, the bankruptcy trustee can either force a sale of the house, take everything over $100K after sale costs and whatever, and give the $100K to the debtor to buy a new house (pretty much unheard of though the law would allow it), or require the debtor to borrow out the extra $10K of equity and turn that over for the benefit of the creditors.

Same for a car worth $10K, though the excess would be only $6,000.

Florida's exemption scheme wouldn't matter because you could not use it.

If everything else were equal (which I expect it's NOT), moving to Florida before declaring bankruptcy would make sense only if there is no homestead in NH to protect, or if there is a LOT less equity in a NH homestead. Add in the costs of moving to see whether it makes economic sense.

Thank you.