Rising Housing Prices and Bankruptcy in Roseville

The real estate market is heating up in Roseville.  Usually a growing real estate market is a benefit to homeowners, but there’s one group of homeowners who face a big problem with rising real estate prices: chapter 7 bankruptcy petitioners.  When you file chapter 7 bankruptcy you can protect certain assets up to certain amounts using California exemption law.  However, if you own an asset that is worth more than what can be protected using California exemptions, the Trustee can sell the asset and distribute the proceeds in excess of the value protected to creditors. For instance, if you own a car worth $10,000 but can only protect $5,100 using California exemption law, the Trustee can sell the car and distribute the $4,900 received in excess of the amount protected to creditors.

California homes can be protected in bankruptcy up to a certain amount in value, but with rising real estate prices prospective bankruptcy clients may need to file ASAP to protect their homes.  If a prospective bankruptcy client waits too long and their house increases in value above what can be protected in chapter 7 bankruptcy two things can happen: (1) the client could lose their home in bankruptcy or (2) protect their home in chapter 13 bankruptcy.  To be safe, homeowners considering bankruptcy should seek legal advice as soon as possible.  With prompt legal advice they can file chapter 7 bankruptcy before their house rises in value beyond an amount that can be protected in bankruptcy.

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