Chapter 7 home exemption
Waukegan Illinois Bankruptcy Lawyers & Attorneys
David Siegel: Okay. Well, if somebody’s a home owner in Waukegan. They own a home. They’re making their mortgage payments on time. Would a person like that be eligible to file a Chapter 7 and wipe out a lot of unsecured debt?
Jesse Barrientes: Absolutely they would. There are some other conditions, and we’re going to need to know about how much equity is in their home, because they have an exemption. It’s $15 thousand per homeowner, so if it’s a husband and wife, even if both of them are not filing a bankruptcy. They can have as much as $30 thousand in equity. Actually they can have more because in order for the bankruptcy trustee to make it worth their while to sell the property to pay some of the creditors, they’re going to have to incur expenses with respect to the real estate agent. They’re going to have to incur closing expenses and all that. So typically five or six percent you can kind of gauge that, and they’re really not going to sell your home, in this market especially, for a few thousand buck.s
David Siegel: I just want to emphasis for our listening audience and viewing audience the term equity that you mentioned. Equity is ownership in the property. So if the property is worth $200 thousand and the mortgage is $150 thousand, that would mean you have $50 thousand worth of equity, correct? The difference between the market value and what’s owed is your equity, or your ownership. Is that correct?
Jesse Barrientes: That’s correct. And you need to take into consideration the second mortgage. A lot of folks have a line of equity, second mortgage, so we need to kind of look at that as well just to be absolutely sure what they have. But you know, a lot of people think, and it’s getting the value of their home, they just – I have people come in and I ask how did you get this value? Where did you get it? I think they just pull it out of the air.
David Siegel: Well, I think the viewer should understand that there is a website, zillow.com, which gives a pretty good estimate as to what the market value is. In fact, that’s what a lot of the trustees look at when they receive a bankruptcy case to determine the value of the house. They’re going to go on zillow.com to get an estimate, and if they’re unsure then they’ll go get a private realtor to come and give an evaluation. But it’s very important. Anybody can go to www.zillow.com to get an average market value of their home.
Jesse Barrientes: You know, and it’s important too because if you do have an appraisal, that’s going to run you, again depending on the appraiser, probably about $300 or so. A lot of people sometimes think oh well I just had my home refinanced and this is what they said the value was. What people don’t understand is that the value really that you get for a refinance is different then the value that you really would get from an appraiser of somebody else. The bank really wants to – and I think this is how we’ve gotten to this big real estate mess – they really want to loan you the money. And so sometimes those appraisals kind of go a little bit more than they should. But you know, another way to find that out is to be able to talk to a real estate agent and find out what the value of your home is.
And what they’re going to do is they’re going to compare your home, the structure, the square footage, the style and everything else with other homes in the area, about maybe a mile or mile and a half radius or so, and they’re going to come up with a value. They’re going to look at also other homes that are similar, what they’ve sold for and when they sold for, and everything else. And remember, a realtor wants to price it to sell because they want to make their commission.
David Siegel: So let’s say there’s not significant equity in the home and the person can file a Chapter 7 with a Chapter 7 bankruptcy lawyer in Waukegan. What sort of debts are eliminated in a typical Chapter 7 bankruptcy case?
Jesse Barrientes: Well, if you have your – if you don’t have too much in terms of the equity in the house and you’re good on that aspect, you can discharge your unsecured debt. Unsecured debt is, for example, your credit card, some other maybe personal loans that you have. Things that you have not secured with property or with your home, those kind of things. But in a Chapter 7 bankruptcy you can pay – rather we’re going to talk about the range in the Chapter 13 in the next show, but that would be discharged. Some of the things that cannot be discharged, and that’s important for people to know.
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