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socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 38899
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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Greetings - My wife and I have filed for Chapter 7 and finishing

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Greetings - My wife and I have filed for Chapter 7 and finishing the forms to satisfy the 14 day timeline. We are on the schedules and are curious about our home and car. We have listed the home under Real Property, but are upside down on the loan about 40k. We also have a car loan we are upside down, roughly 6k. We are on Schedule C trying to determine how to list these items because they have no equity. If applicable, the Exemption law, too. We understand we must list the creditors under the Secured Holdings page, however, are stuck here on C. Thank you.

There is no reason to use a property exemption to cover property which is underwater/upside down -- unless there is some reason to believe that there is a dispute as to the equity value of the property. For example, if you believe your car is worth $1,000, and your loan balance is $1,100 -- but the creditor believes the car is worth $1,500, then you may want to protect yourselves by listing the higher value and using the exemption to cover the vehicle. But, if you're certain that your valuation is correct, then you have no reason to waste your exemption on property that has no equity value, because the debt will be discharged, and it will be up to the creditor to either repossess the collateral or simply leave it to you.

Hope this helps.
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