The homestead exemption in California is $50,000 for an individual debtor living in the home, $75,000 for couples or heads of household, and $125,000 for debtors over 65, or over 55 with incomes of less than $15,000 a year (or $20,000 per year joint incomes). So, when you say you have too much equity in your home, that might be before the homestead exemption has been accounted for. Applying the exemption amount could result in your home not having any equity left such that you could file Chapter 7 bankruptcy, since there would be no nonexempt assets left in the bankruptcy estate to pay the unsecured creditors (which include the credit card debts). Which means the unsecured debts could be discharged completely. Of course, you would still have to continue having sufficient future income to pay the monthly mortgage on the house (assuming there is still a mortgage) or else the bank will foreclose in the future. Chapter 13 could also be filed but that requires you to have a plan showing you have sufficient and continuing future income to pay off the mortgage and a portion or all of the unsecured debts.

Incorporating would do no good since these are prior personal credit card debts and they still could go after your home.

Larry L. Doan, Esq.

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