Bankruptcy Law Questions? Ask a Bankruptcy Lawyer.
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Question: If you have a property that is in join tenancy with 4 people listed, but you obtained a mortgage on the property where you got all of your equity out a few years back, what would happen if you needed to file for bankruptcy? I am considering filing for bankruptcy but this property has equity that would not be protected but this equity is not mine since I belongs to the other joint tenants. I took my portion out many years back. I am in California and are wondering whether if I filed they would force the sale of the home?
Response: If your name is XXXXX XXXXX the property as a joint tenant, the presumption is that 25% of the equity is yours. If you cannot exempt that equity, you have to provide evidence to the trustee that you have already cashed in your equity a long time ago and that any equity belongs to the remaining three joint owners. If you cannot do this, the trustee may force the sale of the house to get 25% equity that is yours.
California has two exemption schemes. You have to choose one or the other. Here are the links to the exemptions: