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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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We want to file a Joint Personal Bankruptcy. Here in Texas

Resolved Question:

We want to file a Joint Personal Bankruptcy. Here in Texas we understand that there are Homestead exemption that allow a certain amount of equity on our home. Problem is that we have mover and are renting another home and attempting to sell. We have an estimated equity amount of 35K after applying the accessed value. Question is should we take a Wildcard exemption of 24k with the idea that the Trustee will view the situation of no funds to be realized for creditor after paying the 1)Mortgage, 2)Ourselves at 24K, and a 3)Realtor Commission in that order? Is the order of payment correct considering no other cash? We only want to realize the equity in our home. Do consider that 99% of our debt was business related, lost the business, some was secured and was reposed and some has been liquated.


Tax Deductions


We have lost a business in 2010 and did not know the amount that the bank would be seeking as a shortage on our loan. The accountant postponed the business loss until this year. We have now been notified of the shortage via Law Suit. We will have to file

a Joint Personal Bankrupted. Can we take the loss of the business as a tax deduction this year as we know the amount, but are filing? Take the loss next year?

Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 6 years ago.
Hi JACustomer,
You have posed 2 questions - one dealing with Bankruptcy Law, and the other dealing with Taxes.
I can answer the Bankruptcy question - as I am a Bankruptcy Law expert - but you would have to ask the Tax question separately in the Tax section.
Is that okay?
Customer: replied 6 years ago.
Expert:  cfortunato replied 6 years ago.


Expert:  cfortunato replied 6 years ago.
If you file a Bankruptcy, you will not be able to use the homestead exemption, since you no longer live in that house.
Since you will not be using the homestead exemption, you can use up to $23,950 to exempt any other property, including the proceeds from you former home.
The mortgage and the broker's commission get paid first, the next up to $23,950 would go to you, with anything left over going to the Bankruptcy trustee.

I think this is what you wanted to know. If not, please let me know.
Thank you!
Customer: replied 6 years ago.

So, if the Trustee takes the property during a Bankruptsey the mortgage is paid first the Realtor second and then we would receive out 23950.00 exemption? If the are funds as that may short sale the property. Then the Creditors FOURTH?


Expert:  cfortunato replied 6 years ago.
The Bankruptcy trustee and the creditors are fourth - the trustee gets 10% of whatever is leftover after you get your $23,950, and the creditors get the rest. (So actually, the creditors are fifth.)
cfortunato and other Bankruptcy Law Specialists are ready to help you
Customer: replied 6 years ago.

We are actuall sepearted due to the stress on the proceding, if we make it official / Divorce than I would slao need a place to stay and the rental property would be for the X.

Then I could claim the Texas exemption of what 36,000.00 and the Trustee would probably determine that there is not enought equite to justify the actions.

OR to be spitful sell and pay the Mortuage and Realator, is that possible.?

Customer: replied 6 years ago.
For the Trustee that is?
Expert:  cfortunato replied 6 years ago.

Thank you for accepting my answer!
If you are separated - living in separate households - you are supposed to file separately, not jointly.
If you are living in a home that you own, you are entitled to the homestead exemption - which is the entire amount of the equity, as long as the home is on less than 10 acres in a city or 100-200 acres outside a city.

This means the trustee cannot sell your home.

Customer: replied 6 years ago.
Is this trun even in Texas? as I thought that there was a fixed $ amount over the Mortguage?
Expert:  cfortunato replied 6 years ago.

In Texas the homestead is protected regardless of the value (if no less than 10 acres...).

Customer: replied 6 years ago.

So in order to keep the our Homestead in Texas, no matter the value, one of us would have to be living there, Correct?


We have a lease on another home, so would a legal seperation meet legals or would a divorcy be necessary? This to serve notice that we would be 2 differnet persons.


Expert:  cfortunato replied 6 years ago.

Yes - if you are paying the mortgage, you can keep your home if one of you is living in it, not matter how much equity it has (if on less than 10 acres...).

To file separately, you just have to declare that you are maintaining separate households. There is no proof required, and a divorce is not necessary.