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  1. #1
    Join Date
    Jan 2015
    Location
    Sacramento, California, United States
    Posts
    1

    Default Wife's Interest in House Bought Before Marriage by Husband

    My question involves bankruptcy in the state : California

    Husband buys home before marriage, before relationship with wife. Husband and wife marry two years after home purchase, they both help pay down the principal, and house increases in value due to market appreciation.

    Wife files Chapter 7 by herself (married, not filing jointly) to get rid of debts incurred before marriage.

    How does wife classify her interest in the aforementioned home? Using "Moore/Marsden" formula? If so, is her interest considered Real Property (Schedule A) or personal property (Schedule B)? If the latter, then which category of personal property?

    In this case, wife can safely exempt all assets if limited to her community property interest in house. If forced to declare all equity in house as an asset, then significant portion of equity is exposed to creditors.

    Any thoughts, input or advice is appreciated.

  2. #2
    Join Date
    Oct 2006
    Posts
    16,474

    Default Re: Wife's Interest in House Bought Before Marriage by Husband

    Quote Quoting mmoore181
    View Post
    My question involves bankruptcy in the state : California

    Husband buys home before marriage, before relationship with wife. Husband and wife marry two years after home purchase, they both help pay down the principal, and house increases in value due to market appreciation.

    Wife files Chapter 7 by herself (married, not filing jointly) to get rid of debts incurred before marriage.

    How does wife classify her interest in the aforementioned home? Using "Moore/Marsden" formula? If so, is her interest considered Real Property (Schedule A) or personal property (Schedule B)? If the latter, then which category of personal property?

    In this case, wife can safely exempt all assets if limited to her community property interest in house. If forced to declare all equity in house as an asset, then significant portion of equity is exposed to creditors.

    Any thoughts, input or advice is appreciated.
    This is a question that should have been posed to her bankruptcy attorney.

  3. #3
    Join Date
    Sep 2010
    Posts
    478

    Default Re: Wife's Interest in House Bought Before Marriage by Husband

    Wife, or more correctly, the marital community, has an equitable interest in the property and the property is listed on Schedule A. A notation is made that the property is subject to a mortgage/deed of trust taken out prior to marriage by the titled owner with a balance of $X. What value you would place on the equitable interest I cannot say. Wife needs to discuss with a local bk attny the application of the Moore/Marsden formula and that bk attny may need the assistance of a DR attny to calculate the amount. I am sure this is a relatively common issue.

    Des.

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