Gilbert’s Expert Bankruptcy Attorneys Explain The Different Methods For Valuing Your Home In Bankruptcy
When you’re struggling with debt, the last thing you want is to have to lose your house also. Many people look to filing for bankruptcy to put an end to their debt problems before they get to the point that they can’t pay their mortgage and lose their house. But many people also worry that filing for bankruptcy will result in the seizure of their house to pay their creditors.
The good news is that you are able to exempt some of your personal property from your bankruptcy estate, and most homeowners will not have to worry about losing their homes. It is important for you to talk through your particular circumstances with a Gilbert bankruptcy attorney so you know how bankruptcy laws apply to your case, specifically.
Arizona Homestead Exemption
Every state has a homestead exemption that specifies how much home equity you are able to exempt from your bankruptcy filing. In Florida, the entire home is exempted, regardless of its value. Other states have much stricter allowances, like Alabama, which has a $15,000 exemption, or Kentucky, which has only a $5,000 exemption.
Fortunately, Arizona is one of the state’s with a generous exemption. You can exempt up to $150,000 in home equity from your bankruptcy estate. Unlike other states, Arizona does not allow you to double that exemption for married couples. The exemption remains the same for single people or for couples.
How Home Value Figures Into a Bankruptcy Filing
You will need to determine how much your home is worth to know if it can be included in the homestead exemption. If you are filing for Chapter 7 bankruptcy and the home value exceeds the exemption, the bankruptcy trustee can seize the home and sell it to satisfy your debts. You cannot dismiss your bankruptcy filing just because you find out that the home is valued at more than you thought and now don’t want it to be taken. You will need to have a solid valuation of the house before you file.
If you are filing for Chapter 13 bankruptcy, you can keep your home, regardless of its value. However, you will have to pay an amount equal to the non-exempt equity you have in the house (anything over $150,000) to your creditors in your restructured repayment plan.
Valuing Your Home
There are a few ways that you can show the value of your home to the bankruptcy trustee, and your bankruptcy attorney will help you determine which is best. Do not use your city or county tax appraiser’s valuation, as these officials often use questionable criteria to value the property, and the value is often disputed by other experts. Also avoid using a quick sale value, as this would not be applicable to a bankruptcy proceeding. The bankruptcy trustee would also use a real estate agent to sell the property and would market it appropriately. The trustee would not have to settle for a quick sale amount.
Here are a few of the options for valuing your home properly:
Hiring a home appraiser is the most effective way to get an accurate appraisal, but it is also the most expensive. You can pay $500 or more for the appraisal.
A less expensive yet still effective option would be to hire a licensed realtor to provide a comparable market analysis that looks at the sale of homes similar to yours in your area to determine value.
The free option for valuing your property is to use a real estate website like Trulia.com or Zillow.com. These websites always offer an estimate of your home’s worth based on recent sales in your area and other factors.
Your Gilbert bankruptcy attorney will review these and potentially other options for valuing your home with you to let you know which will get you the most accurate valuation and will be most likely to be accepted by the bankruptcy trustee. It is important that you have a proper valuation of your house at the outset of your bankruptcy filing so you can make the most informed decision about your options.
contact professional bankruptcy attorneys in gilbert
The bankruptcy attorneys at Gilbert Bankruptcy Lawyers are ready to help you explore your options for debt relief through bankruptcy protection. We’ll review your finances to give you a better understanding of how your home and other assets will be impacted in a bankruptcy filing, and what benefits you can get from filing. We represent clients in Chapter 7 bankruptcy and Chapter 13 bankruptcy throughout the Gilbert area. Call us today to schedule a free consultation with a bankruptcy attorney and learn how you could become debt free.