The answer is ... it depends. Most of the time, there are ways to keep a home and other property. But a debtor needs to be ready to help his or her attorney. Debtors need to gather and produce the documents for their bankruptcy attorneys to show value and ownership. Sometimes, these documents can be a hassle to obtain.
The first issue is to determine the value of the real estate. This can be a simple as using a couple real estate websites that estimates property value for free. A debtor usually has a sense if these sites are accurate. If the sites are not accurate, a homeowner can work with a real estate agent to work up a market analysis on the home. This usually take a little time with an agent. Finally, some jurisdictions may require a full appraisal, which will require paying an appraiser a fee.
The next consideration is the mortgage balance or payoff amount. The balance can be found on the most recent mortgage statement. Most mortgage companies have a place on their website to calculate a mortgage pay off figure. A debtor should provide these documents to his or her attorney.
Subtracting the mortgage balance from the property value will give the debtor the amount of equity he or she has in the property. Equity is the part of t
he house or property that is free of the mortgage lien and the value you want/need to protect. Once it is determine what value of the house or property is free of the mortgage, the debtor has to determine how or what type of ownership he or she has.
If the debtor owns a home alone, that is easy - a single person usually owns a house or real property in "fee simple." That means the person owns it completely with no other owners. The debtor would own all the equity.
It becomes more complicated when a debtor owns a house with someone else. If they are not married, they are generally "tenants in common" or "joint tenants." If the debtor is married and lives in Pennsylvania*, the home could be owned as "tenants by the entireties." This type of ownership provides the strongest protection from creditor and can offer a great advantage is a bankruptcy.
The only way to know for sure the type of ownership a person holds is to review a copy of the deed. Many people lose track of their deed. A copy can be found at the county recorder of deeds. Again, a fee is usually charged for the copy. But it is an important document and should be provided to the debtor's attorney. The chances are the trustee will ask for it at the creditor's meeting if not provided sooner.
While gathering these documents may be a hassle, debtors need to be ready to work with their attorneys to get this information.
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