How will a bankruptcy effect my second home and do I have to include my husband?
Full Question:
Answer:
When you file bankruptcy, you are required to fill out quite a few bankruptcy papers. Among these are Schedule C, which is a form where you list the property you are claiming should be exempt.
Both federal and state laws provide exemptions for certain property that a debtor is allowed to claim as exempt. What property is eligible for exemption status varies from state to state; however, some states allow you to choose whether to use the federal exemptions or your state's exemptions. After a person files bankruptcy, certain exemptions may apply to prevent a creditor from claiming the debtor's property. In California, a debtor cannot use the federal exemptions, but you can use the federal non-bankruptcy exemptions. California allows you to pick one of two options (pick the one that allows you to keep the most property) --
Option 1:
Real property, mobile home, co-op, or condo to $50,000 if single and not disabled; $75,000 for families if no other member has a homestead; up to $125,000 if 65 or older or disabled or $100,000 if 55 or older, single and earn under $15,000 and creditors trying to force the sale of your home; or 55 or older, married, earning less than $20,000 and creditors trying to force the sale of your home; proceeds from sale of home are exempt for six months. [704.710, 704.720 and 704.730]
Insurance / Annuities: Disability or health benefits, unlimited amount [704.130]; life insurance proceeds if policy prohibits proceeds from being used to pay creditors, unlimited amount [Insurance 1017]; fidelity bonds, unlimited amount [Labor 404]; matured life insurance benefits, amount needed for support [704.100(c); fraternal unemployment benefits, unlimited amount [704.120]; homeowner's insurance proceeds up to six months after receipt and up to real estate exemption amount [704.720(b)]; unmatured life insurance policy loan value up to $8,000 if single, married couples can double [704.100(b)]
Pensions / Retirement Plans: Public and Private retirement benefits, IRAs & Keoghs, unlimited amount [704.110, 704.115]; public employees, public retirement benefits [Government 21201]; county employees, firefighters, police officers, unlimited amount [Government 31452, 31913 and 32210]
Option 2:
Real Estate: Real property, co-op and/or burial plot of debtor or a dependent to $15,000; unused exemption may be applied to any property [703.140(b)(1)]
Insurance / Annuities: Disability benefits, unlimited amount [703.140(b)(10)(C)]; fidelity bonds; life insurance proceeds, amount needed for support [703.140(b)(11)(C); unmatured life insurance policy with dividends or loan value up to $8,000 [703.140(b)(8)]; unmatured life insurance policy [703.140(b)(7)]
Pensions / Retirement Plans: Retirement benefits, amount needed for support [703.140(b)(10)(E)]
A married person may file a bankruptcy petition on their own behalf, without joining the spouse. Generally, if the debts are solely that of one spouse, the separate assets of the other spouse may not be attached. However, property that is owned jointly may be subject to being sold so that the equity of the debtor spouse in that property may be used to satisfy the debt. I suggest you contact a local attorney who can review all the facts and documents involved.
