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    Default Re: Trustee Wants to List Bankrupt Homeowner's House on the Market

    So the issue here is that your mother contends that between the amount she owes on the home ($88,000) and the $23,675 federal homestead exemption (since your state has no homestead exemption), with a home value of approx. $110,000 the home should be protected from bankruptcy. Meanwhile, the trustee is taking the position that there is $4,325 or (potentially a lot) more in unprotected equity in the home, and that the unprotected equity should be applied for the benefit of creditors.

    It sounds like the trustee told you that he believes the house to be worth approximately $116,000, based upon the appraisal. It also sounds like her lawyer has a sense of how much equity the trustee believes there to be in the home, because the lawyer has suggested that the amount could be covered by the portion of the wildcard exemption that would otherwise be applied to your mother's vehicle.

    The primary options are to try to work out a financial settlement with the trustee, to convert to Chapter 13 (which will also remove the case from this particular, aggressive Chapter 7 trustee), listing the home and seeing whether offers come in above what your mother believes the home to be worth, or getting an independent appraisal and bringing a motion with the bankruptcy court to ask the court to resolve the issue of the home's reasonable market value and to order the trustee to relinquish any claim to the home above that value. Or she can simply assert that the home has no value to the estate and file a motion for the court to direct the trustee to abandon the property. Either way, there may be a cost to your mother in bringing and arguing the motion -- I can't speak to whether that's covered by her existing fee agreement and negotiated fee.

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