Articles Posted in Homestead

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house-150x150Florida’s Bankruptcy Laws offer a very generous Homestead Exemption for those filing bankruptcy here in the Sunshine State. As long as you have owned your homestead property for 1,215 days or more prior to filing bankruptcy, the Florida Homestead Exemption is unlimited! How awesome? Right?

However, don’t get too worried just yet if you have not owned your homestead for 1,215 days. You can still take advantage of the Florida Homestead Exemption and protect up to $125,000 of the equity in your home per Debtor. That means that a couple can still protect up to $250,000 of the equity in their home when filing bankruptcy together, which is still pretty awesome!

But what happens when you file a Chapter 7 Bankruptcy with other real property that is not your homestead? Can that property be protected? How the property is treated will completely depend on whether or not the property is mortgaged and/or if there is any equity in the property. If the property is encumbered by a mortgage and there is no equity in the property, then you should be able to simply continue making those normal monthly mortgage payments, and the bankruptcy should not have any effect on the property whatsoever. However, if there is any equity in the property, then the Trustee will most likely take possession of the property and sell it in order to reach the available equity. Unfortunately, there is no exemption available to protect real property that is not your homestead.

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home_under_waterMany people over the last several years have been forced to file bankruptcy because they faced foreclosure. In many of these bankruptcies, the homeowner chose to surrender their home because it did not make financial sense to try and keep it. Years later they find out that the home is still deeded in their names and are understandably shocked as they further learn they have also remained financially responsible for the property taxes, homeowner associations dues, etc. associated with that home. This is because even though you elected to surrender your home through bankruptcy and receiving the discharge relieved you from the liability of the mortgage debt, the bankruptcy did not automatically take the property out of your name and put the deed to the home in the name of your mortgage holder. So what can you do? The answer to this question is not going to be what you want to hear.

There are 2 ways in which the deed of your surrendered home can be transferred out of your name. The first is for your mortgage holder to agree to a deed-in-lieu of foreclosure. A deed-in-lieu of foreclosure is where the bank agrees to take back possession of the home and you simply sign the deed over to your mortgage holder and provide them with the keys. In order to get a deed-in-lieu of foreclosure, you must reach out to your mortgage holder and ask them if they will agree to a deed-in-lieu. If your mortgage holder refuses to accept a deed-in-lieu, your only other option is to wait for your mortgage holder to foreclose on the home. When your mortgage holder begins the foreclosure process, it is important to make sure they are only foreclosing “in rem.” This means they are only asking the court for possession of the home and not suing you personally for the debt, since the debt was discharged through your bankruptcy.

Unfortunately, it may take your mortgage holder years to begin foreclosing on the home. It is important to know that as long as the property remains deeded in your name, you will remain responsible for the property taxes, homeowner association dues, the upkeep of the property, etc. If it does take your mortgage holder years to foreclose, it could also mean you will have to wait even longer after you received your discharge in order to purchase a new home. This is because the foreclosure judgment will most likely be reported on your credit report.

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houseWhen filing bankruptcy, whether it be a Chapter 7 or a Chapter 13, and you own your home or some other piece of real property that has Homeowner Association (HOA) Fees, it is very important to understand what will happen to your past due HOA fees and your HOA fees that will become due after filing bankruptcy. Understanding what your responsibility will be regarding your HOA fees before and after filing bankruptcy, can help you determine when and if you want to file.

If you are behind on your HOA fees and choose to surrender your real property when you file bankruptcy, all HOA fees that became due before you file will be discharged through your bankruptcy. HOWEVER, all HOA fees that become due beginning the day after you file are not dischargeable. This means that you are no longer liable for the HOA fees you owed before the day you file bankruptcy, but you are responsible for all HOA fees that became due after you file.

This situation has been addressed by the 11 U.S.C. § 523(a)(16) of the United States Bankruptcy Code, which states “for a fee or assessment that becomes due and payable after the order for relief to a membership association with respect to the debtor’s interest in a unit that has condominium ownership, in a share of a cooperative corporation, or a lot in a homeowners association, for as long as the debtor or the trustee has a legal, equitable, or possessory ownership interest in such unit, such corporation, or such lot, but nothing in this paragraph shall except from discharge the debt of a debtor for a membership association fee or assessment for a period arising before entry of the order for relief in a pending or subsequent bankruptcy case.”

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home-in-handsHave you inherited your parents homestead property? Do you own it free and clear from any mortgage or lien? Do you reside in the property? Are you considering filing a Chapter 7 Bankruptcy? If so, then I urge you to consult with an attorney at the Law Office of David M. Goldman, PLLC. Each one of the questions posed above are key factors in determining what affect a Chapter 7 Bankruptcy filing may have on your inherited real property.

In Florida there is a broad homestead exemption available to those filing bankruptcy; however, you must first meet some very strict requirements. If you acquired the real property at least 1,215 days (approximately 3 years and 4 months) prior to filing the bankruptcy and it is your homestead, then you may use an unlimited homestead exemption, but if you have not, then your homestead can only be protected up to $125,000. It is also important to note that you do not have to reside in the subject property as your homestead for the 1,215 days prior to filing bankruptcy in order to enjoy full protection. For example:

Your mother and father have lived in their current home in Florida as their primary residence for the last 15 years and even filed their homestead exemption with the state. When they pass away, they leave their homestead property to you; free and clear from any mortgage or lien. However, you do not move into the property and instead you continue to reside with your wife and children in another home, which also happens to be in the state of Florida and which you consider your homestead.

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Once a debtor files for bankruptcy, his or her home and other possessions become part of their bankruptcy estate. While creditors cannot automatically foreclose on the property because of bankruptcy protections, the debtor is likewise not allowed to sell a house without first obtaining permission from the court.

During a Chapter 7 bankruptcy, it can be difficult to sell a home. The debtor must first convince the court that the sale will not prejudice ay creditor. A trustee must also obtain the court’s approval to sell a home in order to generate cash for creditors.

However, in a Chapter 13 bankruptcy, a debtor is allowed to sell his or her home as long as the sale does not cause financial harm to the mortgage lender.

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Debtors who file for Chapter 7 bankruptcy and owe HOA fees may be able to wipe out these debts. Filing a Chapter 7 bankruptcy is usually a good option if the debtor wishes to give up their home. However, it is important to remember that HOA fees that accrue after filing for bankruptcy cannot be discharged.

A debtor who files a Chapter 7 bankruptcy is required to sign a statement of intention regarding secured debts. This form tells the court and trustee whether the debtor wishes to retain or surrender their property. Debtors who can no longer afford their homes often choose to surrender their property through a Chapter 7 bankruptcy. Through a Chapter 7 bankruptcy, a debtor may be able to discharge all the debts associated with their home, including any homeowner’s fees.

There are a few options for debtors who acquire HOA fees after filing a chapter 7 bankruptcy. One possible solution might include contacting the HOA directly to negotiate a settlement or agreeing to let the association take the property. We recommend contacting an experienced bankruptcy attorney before taking any action.

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As a Jacksonville Bankruptcy Attorney I get calls all the time regarding the ability to keep their homes during and after a Bankruptcy. As such, I will try to briefly explain the process of a Chapter 7 and the ability to keep your home after you have filed.

When a client files for Chapter 7 Bankruptcy they are looking to liquidate all their debt and have a fresh start. With the downed economy this avenue for financial recover is becoming more and more prevalent. As I consult my clients as to their options in Bankruptcy, the number one question I receive is “Will I lose my house in Bankruptcy?” Unfortunately, the answer to that question is not always cut and dry. Meaning just because you file for Bankruptcy does not mean you will automatically keep your home. The main determining factor is EQUITY.

The question of Equity is key to keeping your home. Meaning, if your home has equity and it cannot be covered by exemption, the Trustee may want to sell your home to pay your creditors. However, if the equity amount will be covered by exempt status or the amount will not pay the costs of selling your home the Trustee may decide you can keep it. With that being said, I do not mean you get a free home. I mean you are able to stay in the home as long as you are current and making your mortgage payments.

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Warren Bodeker BankruptcyMontana Bankruptcy laws have lead to the liquidation of a WWII veteran who has been forced to leave the home he built for himself and his wife in 2000.

Warren Bodeker, 89, was ordered to leave the home as it was not exempt from collection by creditors.

“There will be nothing left. I’m not going to have anything.”

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Divorce, Bankruptcy, Property Division, Mortgage Refinance
Divorce in Jacksonville, Florida is not a rare thing. According to Daily Beast, the city of Jacksonville has the ninth highest divorce rate of all cities in the United States. Many of these couples are jointly liable on home mortgages when they file for divorce. Since 46% of homes that have mortgages are underwater, many people are “left holding the bag” for mortgage payments they can’t make, refinance or otherwise settle with. Often times the only option for these people is bankruptcy. Bankruptcy and Refinancing are often the only options for debtors to have their personal liability removed from un-payable mortgage notes.
When one ex-spouse files for bankruptcy, it almost invariably causes the other to file. Of course this depends on whether or not couple had purchased a home using combined credit scores and on whether or not the non-filing individual can handle the mortgage payment on their own. If the individual is able to make the payment on their own, they may be able to refinance the mortgage, allowing for the other party to be removed from the liability on the note.
If you have questions relating to the interplay of bankruptcy and divorce, contact a Jacksonville Bankruptcy Lawyer or call us at (904) 685-1200 for a free consultation.

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Florida Homestead BankruptcyAlthough it’s rarer these days, people occasionally come into my office who have equity in their home. This is fortunate because Florida has one of the most generous homestead exemptions in the United States. There are exemptions on a federal level, but if a state chooses to create their own, residents of that state must utilize the state exemptions instead of the federal ones. Some states, like Pennsylvania, have no homestead exemption at all.

The Florida homestead exemption requires that the property be either: one half acre if within a municipality or one hundred and sixty contiguous acres outside a municipality. This is a unique benefit for many folks who live in Fleming island because it is largely unincorporated. What this could mean is that a person could file bankruptcy and retain a home with two million dollars in equity as exempt property and, if it’s in an unincorporated area, the property could cover several acres of land.

This exemption is outlined by the Florida Constitution, Article X, § 4. Land located within a municipality that was previously unincorporated can still be “homesteaded” as it so referred, unless the owner of the land consents to inclusion into the municipality.

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