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Roger, Attorney
Category: Bankruptcy Law
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How does "equitable title interest" work in bankruptcy? For

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How does "equitable title interest" work in bankruptcy?

For example, in Utah we are not a community property state, but we are an equitable property state. If a husband and wife are married 10 years and lived in the home together for 10 years each gets half the equity of the property in a divorce most of the time.

Suppose the husband is on title to the home and the wife is not and the wife files for bankruptcy by herself.

Suppose the equity is $100,000. Can the chapter 7 trustee seize the $20,000 in equity that is not exempt even if she is not on title due to an equitable title claim?

Here is the calculation:
$100,000 equity
$30,000 husband homestead exemption
$30,000 wife homestead exemption
Husband gets $50,000 equity for his half and wife gets $50,000 equity for her half
$20,000 is left over unexempt for the wife who filed bankruptcy.

Roger : Hi - my name is XXXXX XXXXX I'm a Bankruptcy litigation attorney. Thanks for your question. I'll be glad to assist.
Roger : The wife's equitable interest in the marital property should still be there even if she's not on the deed since the house is marital property.
Roger : Also, the divorce decree is going to determine the wife's equitable interest in the house, and that determined interest would be subject to the bankruptcy laws, and any non-exempt equity would be subject to the trustee's authority to recover the funds.

Well, first they are still married. I was only using the divorce as an example to help explain the situation.


So let's assume they are still married. Does the property still have to be listed on Schedule A with ownership of "equitable title" or "equitable interest"?

Yes, because she's got an equitable interest/ownership interest in the property.
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