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Benefit from the Experience of Attorneys Bill and Valerie Sherman Former Assistant Attorney General, Assistant County Attorneys and Magistrate Judge

Bankruptcy: Can I keep my house?

What about my house?

A frequent question we get is what happens to a person's house if they file bankruptcy. Most of the time, the home can be kept by that individual.

But each situation is different, and we wanted to discuss some issues involved in making a determination as to how to handle a house.

Does the house have equity?

If the property doesn't have any equity, then there is usually no issue whatsoever. If there is equity, however, then we need to determine exactly how much equity exists in the home.

Comparative market analysis

A tool that can be utilized to determine if there is any equity, as well as how much equity, is a comparative market analysis. A comparative market analysis will help us determine the value of the property by looking at what similar homes in your area have sold for.

The homestead exemption

Once we determine the value of the house, we check on how much is left on the mortgage note. The State of Georgia provides for a homestead exemption of $21,500.00 for a single person and $43,000.00 for married couples.

That homestead exemption means that if there is equity in the property of $21,500.00, or $43,000.00 for married couples, or less, then it is considered, for bankruptcy purposes, to not have any equity at all.

If there is value in excess of the homestead exemption, it would be up to the discretion of the bankruptcy trustee as to whether they believe the property should be sold and the proceeds used to be pay your creditors.

Will there be a substantial return from a sale?

However, the trustee appointed to your case will generally only pursue the sale of the property if they believe there will be a substantial return from a sale which they can then disburse to your creditors.

There are some trustees that are more aggressive than others. Many trustees will not only look at the potential equity, but they will factor in real estate broker and agent commissions and any needed repairs to the property. And once the commissions and repairs are factored in, a trustee may choose not proceed with an action to take possession of the property. There are different trustees, however, and it is up to each individual trustee to make his or her own judgment if there is enough equity in your home to pay-off some of your creditors.

That's why each real property issue needs to be analyzed at on an individual basis.

A trustee can do their own appraisal

A trustee is free to order their own appraisal and make their own determination of the value of the property and whether to proceed.

Other options if necessary

Should the trustee decide to pursue the property, there are options at our disposal to protect the house from being sold. This would include trying to work out a payment arrangement with the trustee to pay off the available equity in the house over time, or to convert a chapter 7 case to a chapter 13 bankruptcy where you would make payments over a 5- year period to cover the available equity.

About Us

Owing too much debt can be terrifying. If you owe too much money and need questions answered, we're available 24/7. Bankruptcy means a fresh start. When you need to speak with a bankruptcy lawyer, just call us at 678-215-4106.

Get out of debt now! Stop the anxiety!

Attorneys Bill Sherman and Valerie Sherman and the team at the Sherman Law Group will help you navigate the entire bankruptcy system. We proudly serve the entire Atlanta Metro Area and North Georgia.