Legal Question in Bankruptcy in Kentucky

How to file bankruptcy and keep home

I own my home outright. It is worth approximately 65K. Would I have to sell my home to file? I have more than 65K in unsecured debts (medical and credit card) and a low fixed income. Can I file chapter 7? I have tried unsuccessfully to take out some equity in my home but my FICA score is too low and/or my income is too low.

Asked on 4/10/09, 6:00 pm

1 Answer from Attorneys

Gregory Napier Troutman & Napier, PLLC

Re: How to file bankruptcy and keep home

An individual can claim up to $20,200.00 exemption on their homestead. If married and filing jointly, the two can combine their exemptions to claim $40,400.00. Even if you are married, that still leaves over $25,000 that is non-exempt. So, a Chapter 7 would put your home at risk unless you have a way negotiating a settlement with the Trustee - in other words, if you could somehow come up with a chunk of money - I'm guessing around $15,000 to "buy" your non-exempt part of the home. The Trustee MIGHT consider this since it would avoid the cost of a sale in an uncertain market.

Obviously, you are having a hard time laying your hands on a large amount of money.

Your best bet is to look at a Chapter 13 which, depending on your income, would run 3 or 5 years. You should take your specific facts to a bankruptcy attorney or to a NON-PROFIT credit counseling service approved by the US Trustee's office.

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Answered on 4/11/09, 11:19 am

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