Posts Tagged ‘homestead bankruptcy exemptions’

Homestead Bankruptcy Exemptions – What Happens to Your Home when You Go Bankrupt?

The legal provisions applicable to homestead bankruptcy exemptions vary from one state to another. Though the federal laws apply everywhere in the United States of America, states are also allowed to have their own rules and regulations. If you are considering filing a petition to be declared as bankrupt so that you could get rid of your debts and start your financial life afresh, you must know whether you will be able to keep your home or not after the final judgment comes from court that declares you bankrupt. In states that have no provisions homestead exemptions, you will be required to file a declaration of homestead while filing your petition.

States Where the Exemptions are Based on Equity and Lot Size

Oregon, Nebraska, Mississippi, Minnesota, Michigan, Louisiana, Hawaii, and Alabama are the states where bankruptcy exemptions related to your home or residential property are determined on the basis of lot size and equity.

States Where the Exemptions are Based on Lot Size

The states where only lot size is considered when it comes to determining the value of homestead properties to be exempted include Texas, South Dakota, Oklahoma, Kansas, Iowa, Florida, and Arkansas.

States Where the Exemptions are Based on Equity

There is a very long list of states that fall under this category – Wyoming, Wisconsin, West Virginia, Washington, Virginia, Vermont, Utah, Tennessee, South Carolina, Rhode Island, Ohio, North Dakota, North Carolina, New York, New Mexico, New Hampshire, Nevada, Montana, Missouri, Massachusetts, Maine, Kentucky, Indiana, Illinois, Idaho, Georgia, Connecticut, Colorado, California, Arizona, and Alaska.

States that do Not Allow Debtors to Get Their Homes or Residential Properties Exempted

There are four states that do not allow any homestead bankruptcy exemptions. These states are Pennsylvania, New Jersey, Maryland, and Delaware.

Unlimited Exemption

The District of Columbia is the only place in the United States of America that allow the debtors to keep their home or residential properties, irrespective of the value of the properties. There is no upper limit.

What Federal Laws have to Say?

As per the legal provisions made under federal laws, you are allowed to keep up to $21,625 worth of equity in your home. The overall value in home and residential properties that can be exempted is $125,000 for properties that you have acquired within the last 1215 day days (3 years and 4 months).

You have the options to go for the federal homestead bankruptcy exemptions, but if you want to take advantage of the state laws, you will have to first figure out which state laws are applicable in your case. In general, if you have been living in state for the last 24 months, the laws applicable in that state will apply to you. However, if you have been shifting from one state to another in these 24 months, the state applicable to you is the one where the majority of the 6 months preceding the 2 year period.

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