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Elizabeth Prentice
Elizabeth Prentice, Attorney
Category: Bankruptcy Law
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Experience:  Managing Attorney for one of the largest consumer bankruptcy firms in America.
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If a debtor who is filing a chapter 7 BK owns a home valued

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If a debtor who is filing a chapter 7 BK owns a home valued at $155,000 and has a reverse mortgage in the amount of $107,000. Leaving approximately $48,000 of equity. She lives in the state of GA. The homestead exemption appears to be $21,500.

My question is would the Trustee force sale in this example? If he/she does would she receive the the first $21,500 from the sale?

I am a bankruptcy attorney and I would be happy to assist you. It appears you are correct about the exemption, after looking at Georgia Code 44-13-100 and 44-13-1. The question now becomes how to get the value of the home as low as possible, so that you can exempt it. I would recommend looking at the county assessor's value, which is typically much less than zillow. You could also pay to have an appraiser create an appraisal for you, but that will cost a fee. Courts will accept county assessor's values, even if much lower than an appraisal. You need to note how you determined the value on schedule A, though. If there is no way possible to get the value of the home lower, then the trustee will first ask that the debtor pay the trustee the value of the non-exempt portion. If that is not possible, then the trustee can potentially do a trustee sale of the property. A different (better) option would be for the debtor to convert to a Chapter 13, wherein she would keep the house but she is required to pay back the non-exempt portion of her assets to the unsecured's over the 3 to 5 years as a plan payment to the trustee. If there is no way to lower the value of the value of the home and she knows she won't be able to pay the Chapter 7 trustee the $21,500 after filing bankruptcy, she should probably file a Chapter 13 to begin with if she wants to keep the property. She should consult with an attorney and have them run through the numbers quickly in a Chapter 13 plan and see what her estimated plan payment will be first, before she makes a decision which Chapter to file.


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