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Attorney2020
Attorney2020, Attorney
Category: Bankruptcy Law
Satisfied Customers: 2579
Experience:  I am a practicing attorney. I have experience in business law, real estate law, bankruptcy and estates.
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What can my friend expect the BK trustee to do with his house? My

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What can my friend expect the BK trustee to do with his house?
My friend DB is planning to file pro se Chapter 7 BK. DB has been out of work for a long time. The CA, EDD has been after him for years, they have a lien on his property for about $6,000.00 and they say that he owes them total $18,000.00 to date. DB is also past due on his property tax and the tax collector is threatening to sell his home. DB owes $17,000.00 to the L.A. county tax collector. DB owns his home outright and it is worth about $86,000.00 according to Zillow.
DB has no credit card debt. He only has $1,000.00 total of personal property. He has nothing else, No stocks, bonds, 401K, etc. DB is legally married however he has been separated from his wife for about 4 years. DB lives in his home alone. DB is the only name on the Grant deed because the mortgage company wouldn’t allow his wife’s name on the mortgage due to her bad credit. DB is 53 years old.
DB wants to file for the $50,000.00 exemption credit on schedule A. Do we understand this correctly, DB will get the $50K and then what’s left will go towards his debts after the trustee handles the sell of his home? DB hopes that is the case.

Attorney2020 :

CA has a homestead exemption in DB's case that will protect upt to $100,000 of his home. DB could keep his home even though there is $86,000 of equity during and after his CH 7 Bankruptcy proceedings are over. 704.730 - Real or personal property occupied at time of filing for bankruptcy, including mobile home, boat, stock cooperative, community apartment, planned development or condominium, up to the following limits: $75,000 if single and not disabled; $100,000 if family and no other member has homestead; $175,000 if 65 or older or if physically or mentally disabled; $175,000 if creditors are seeking to force sale of your home and you are either (a) 55 or older, single and earn under $25,000 per year, or (b) 55 or older, married and earn under $35,000 per year. Sale proceeds are exempt for up to 6 months after sale.


704.920 - Homestead declaration may be filed to protect the proceeds of a voluntary sale up to 6 months or to protect the exemption amount from a judicial lien.

Attorney2020 :

It was my pleasure assisging you. Please do rate my answer at your earliest convienice.

Customer:

If I understand it, DB will be exempt completely of the property taxes $17K and the EDD fines $18K and owe nothing after he receives his BK discharge?

Attorney2020 :

Not exactly, the equity in his home will be exempt. However, government debt is not dischargeable.

Customer:

How does BK Court protect or ensure DB's $100,000 exemption and pay the $35,000 debt? The only way DB would be able to pay it is a forced sale of his home. He was hoping that the trustee would handle the sale of his home before the county tax collector does.

Attorney2020 :

The trustee could sale his home to pay the tax debt or not. It really depends on the trustee. The $86,000 in equity that could potentially be made on teh sale of the home will be exempt. However, DB will still be liable for the tax debt.

Attorney2020 :

Pleade do not forget to rate my answer.

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