Question For Qualified: Is There A Way To Protect Your Home In A Chpt 7?

I have met with three attorneys through the initial phase of interview for a CH 7 BK. Each says that although a BK filing for a CH 7 involving credit card (unsecured) debt should go through and be discharged fairly routinely, that there is a possibility that the mortgage holder (of the family home of 12 years) may not renew or " reaffirm" the mortgage note,despite the mortgage, taxes and homeowner insurance never having been late and is presently current. This possibility (of being ordered to surrender the property, or call the note due and payable in full) along with that of losing cars and other assets that have already been paid in full (some like cars that took 5 years to pay off, in good faith) has KEPT ME FROM PURSUING the CH7. (Total cc debt of $80K)

I would appreciate someone herein to please address this concern. Most of the legal advice I have received urges me to move forward with the BK, stating only that: "It is unlikely that these items of concern will have to be surrendered." and, "In all of the cases I have had all have been reaffirmed, but there are no guarantees.)

This rather cavalier attitude seems to be a crap shoot to me, and I hardly want a mortgage on my family home that has been paid on-time for 12 years, and cars that have been paid off (and are older, for that matter) to be on the trustee's arbitrary green-felt table.

Are there no guarantees of our right to ownership, as far as our home and immediate possessions are concerned? (state of TN)

I have paid all bills for over 25 years on time and most in full, until just last year when numerous personal challenges (medical, corporate retirement plan was not properly funded, family member died, business closed) - interrupted life as usual.

Constructive and knowledgeable legal or experience-based advice appreciated. thank you.============
3 Responses Jul 22, 2012

I too just filed chapter 7 and this concern never came up and my lawyer was a 30 year lawyer practicing bankruptcy only. I did read in my paperwork that there is a chance the bank will not reaffirm or allow you to continue to make payments on your home but in her 30 years of experience there was not one case of this when the payments were current. That's pretty good odds. If you don't file bankruptcy what are you going to do? I too did not like a lot of things about filing but I think when you are backed this far in the hole you really have little choice but to file and hope for the best. I will never be in this place again. My 341 meeting was last week and it was not all that bad. I am thankful America has a bankruptcy law to protect those of us who find ourselves in this horrible situation. $80 cc debt is a lot to try to dig out from under. If you earn over $100,000 a year, it may be possible if you do the beans and rice lifestyle. My cc debt was $40 buy I only make 38. Good luck to you

What I have learned is below, but I still receive a "cautionary" statement from the attorneys, which gives me pause, and had caused me to do further due diligence on my own before handing over another retainer. I get the distinct feeling that some of the BK attorneys try to "close the sale" on the atty / client relationship and use the compromised position of disempowerment to inject fear instead of providing comprehensive process information. Below is the information I have this far. It appears clear if one can determine which set of conditions applies to one's own situation, however, mine is not cut and dry, as an estranged spouse was living out of state due to a medical condition. So, the residency question comes up. ==============<br />
There are different "exemption" amounts for each state. For instance, CALIF has a homestead exemption of $25K +- I believe it is, which means that of the equity available $25K cannot be considered an amount to force a sale to pay a creditor. (I may not be explaining this well, I am learning as I go.) No, I do not have much equity, a bit less than $20K.<br />
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If you file for bankruptcy in Tennessee, the Tennessee homestead exemption protects equity in your home. The amount that you can protect varies depending on your marital status, your age, and whether you have dependents. Read on to find specific information about the homestead exemption in Tennessee. (And you can find the same for Texas).<br />
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For information about how the homestead exemption works in both Chapter 7 and Chapter 13 bankruptcy, see The Homestead Exemption in Bankruptcy. For more articles on exemptions, see our Bankruptcy Exemptions area.<br />
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The Tennessee Homestead Exemption Amount<br />
Under the Tennessee exemption system, homeowners may exempt up to $5,000 of their home or other property covered by the homestead exemption which is a principal place of residence. Joint owners of property, such as married couples, may claim up to $7,500 on property used as their principal place of residence.<br />
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An individual who has one or more minor children as dependents in the household may claim up to $25,000 on property owned by the individual and used as a principal place of residence.<br />
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An unmarried individual who is 62 years of age or older may claim up to $12,500 on property used as his or her principal place of residence. A married couple, one of whom is 62 years of age or older and the other is younger than 62 years may claim up to $20,000 on property used as their principal place of residence. A married couple, both of whom are 62 years of age or older may claim up to $25,000 on property used as their principal place of residence.<br />
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Doubling for Married Couples<br />
Some states allow you to double the homestead exemption if you are married and filing for bankruptcy jointly. In Tennessee, the statute specifically provides that married couples can only claim up to $7,500. Thus, you cannot the double the original $5,000 to receive $10,000.<br />
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However, married couples in Tennessee are allowed to double the exemption if they have one or more dependent minor children under their custody. This means that a married couple with one or more children can claim up to $50,000 instead of $25,000 because each spouse receives the benefit of the exemption.<br />
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The Scope of the Tennessee Homestead Exemption<br />
In Tennessee the homestead exemption applies to real property used as the debtor’s principal residence, which includes your home and condominium. Any interest in a family cemetery not larger than one acre, or a burial plot in a cemetery, or a space in a mausoleum is also protected.<br />
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The homestead exemption in Tennessee also applies to property held in a life estate as well as property held in a lease lasting for two to fifteen years.<br />
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Can You Use the Federal Bankruptcy Exemptions in Tennessee?<br />
Some states allow bankruptcy filers to use the federal bankruptcy exemptions instead of the state exemptions. Tennessee is not one of those states. If you reside in Tennessee you must use the state exemptions.<br />
(To learn more about which state exemptions apply to you, see Which Exemptions Can You Use in Bankruptcy?)<br />
Homestead Declarations<br />
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In Tennessee the homestead exemption is automatic – you don’t have to file a homestead declaration in order to claim the homestead exemption in bankruptcy.<br />
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Real Property Held as Tenancy in the Entirety in Tennessee<br />
If property is held as a tenancy in the entirety, it means the property is jointly owned by a married couple as a single marital entity, not as individuals.<br />
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In Tennessee, if property is held as tenancy by the entirety, the entire value of the property may be exempt against debts owed by only one spouse. <br />
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Homestead Exemption for a Surviving Spouse and Minor Children<br />
In Tennessee, if a person dies and leaves a spouse or minor children, the deceased’s homestead exemption is transferred to the surviving spouse and minor children, without them having to pay the debts of the deceased before the transfer.=============== For those of you researching these questions for your own state, should be able to find similar details. ==========

Interesting? I just filed chapter 7 in Texas and there was never any concern about my home loan. I too never been late payment. Now you have me a little worried. I don't really see where you have much of a choice with 80k in cc. Not unless you have a high income or other sources to draw from. I have 40k in cc but my yearly income is only 37,000. Those credit card debt sure has a way of creeping up on you. I live on cash paycheck to paycheck now. I would not think you have much to worry about unless you owe way less than the house is worth which might make it worthwhile for them to take the home. My lawyer whom has been only in bankruptcy law for 30 years never indicated to me this was a concern. Is your home worth way more than you owe?