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  1. #1
    Join Date
    Aug 2008
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    1

    Default Do I Have Too Much Equity in my Home to File Bankruptcy

    My question involves bankruptcy in the state of: Minnesota
    I'm in the middle of a divorce.
    My wife does not work, I'm make roughly $40k/yr.
    We have roughly $80k in equity in the home($50k is mine, non-marital, although both #'s keep falling with the housing market)
    We have roughly $80k in credit card debt. No other debt other than mortgage.
    Own 2 vehicles free & clear (1 is worth $11k, other $4k).
    I was willing to take 1/2 the debt & try to pay it off, but, found out wife will file bankruptcy, & since I am joint on most of the debt, I will be stuck with all $80k.

    Can I or we file chapter 7 & keep the home or can they make I or us sell it? Does that apply to the vehicles as well??
    We do not have much of value in anything else.

    The thought of filing bankruptcy makes me sick, but I think I would feel worse if was homeless, but debt free. Any insight would be greatly appreciated.

  2. #2
    Join Date
    Sep 2005
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    98,846

    Default Re: Do I Have Too Much Equity in my Home to File Bankruptcy

    Obviously, one of you is going to be moving out of the home.

    You should talk to your divorce lawyer about using the home equity to pay off the debts. If you each pay $30K, that pushes the debt down to $20K. You could agree to assume the remaining debt in return for a few additional marital assets (e.g., the more expensive car, perhaps some items of furniture) or in lieu of paying her spousal support... whatever you work out. If you want to keep the home, you could refinance or pay off most of the credit card debt with a home equity loan.

    If you truly want to file for bankruptcy, you should seek out a free consultation with a bankruptcy lawyer and have your lawyer evaluate your situation and advise you as to how you should proceed.

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