Is Your Riverside Home Protected in a Chapter 7 Bankruptcy?
One of the primary concerns that our Riverside clients have when considering filing for Chapter 7 bankruptcy is whether their home is protected. Many do not even consider bankruptcy because they think their home will be sold in a bankruptcy. In many cases your home can be protected in a bankruptcy. Whether you can protect your home in a bankruptcy depends on the value of the home, how much you owe on the home, and how long you have owned your home for.
How Much Equity Can You Protect in a Riverside County Home in Bankruptcy?
As of January 1, 2021 the amount that you can protect in your Riverside County home has significantly increased. The new law basis the amount of protection on the median single family home sales price in your County for the last year. The new law does not provide what to reference to determine the median home sales price in Riverside County. There are several organizations that provide this information including California Association of Realtors. Based on the information provided by the California Association or Realtors and other organizations the median single family home sales price for 2020 would range around: $400,000 to $450,000 for Riverside County. Based on the sales prices for 2020 the homestead exemption would be approximately $400,000 to $450,000.
Can All Riverside County Home Owners Use this Amount to Protect Their Home?
There are limitations as to who can use the full homestead protection. Two important factors are when you acquired your home and whether you reside in the property. If you acquired your home within 1215 days prior to your bankruptcy filing then the homestead exemption is limited to $170,350. If you do not reside in the home then you may or may not be able to utilize the homestead exemption. For more information on this you can visit our blogs on the topic at: Claiming a Homestead Exemption If Not Living In Home.
How is the Equity Calculated for the Homestead Protection in Riverside County?
Generally in our office we determine the amount of equity by looking at the value of the home. There are many options for determining the value of the home which include looking at a broker pricing opinion, appraisal or looking at online valuations through zillow.com or other comparable websites. Which of these makes sense to utilize will depend on the particular facts of the case. Generally if the property is likely to have substantial equity then we would recommend a broker pricing opinion or appraisal. Once we have arrived at an estimate of the value of home, we generally will factor out 8% cost of sale and the amount of the mortgage owed to determine the equity of the home.
Example: Riverside Home Value is $800,000 with a $400,000 mortgage balance. We factor out 8% cost of sale to arrive at $736,000 and after deducting the $400,000 mortgage the equity in the property is: $336,000. If this is the person’s residence and they acquired the property more 1215 days ago, then they would be able to utilize the full homestead amount for Riverside County.
It is important that you consult with a Riverside Bankruptcy Attorney to ensure that your home is protected. This is especially important when you have equity in your property. There are other limitations to using the full homestead exemption and a qualified attorney can review your situation to make sure that your home is protected in a bankruptcy. For a free consultation contact us at 951-241-8070.