Well, you know by now that the answer is: It depends.
If you file Chapter 7, and either are current or get current with your mortgage(s), then you can most likely keep your home. (Assuming you don’t have an equity interest that exceeds the homestead exemption. As to which, see this blog post: California Homestead Exemptions Increased as of January 1, 2010. Other California Bankruptcy Exemptions will increase on April 1, 2010.)
If however, you are in arrears, and are not able to bring the loan current, then–unless you can complete a mortgage modification that allows you to stay–you are likely lose the home.
On the other hand, if you file Chapter 13, and are able to successfully get a payment plan approved by the Court, then you may be able to stay. This is because in a Chapter 13, you can take the outstanding mortgage arrearages, and pay them back through the Chapter 13 plan over the 3 to 5 year commitment.
But don’t try to do this analysis yourself. Talk to a bankruptcy lawyer before you get too excited. There are lots of nit-picky little rules that can torpedo an otherwise possible successful Chapter 13. You need to do the analysis up front.
The California Homestead exemption (found in CCP §704.730 for those keeping track) was increased as of January 1, 2010.
The Homestead Exemption is the amount of equity in excess of existing liens that the homeowner can protect from levy by creditors. So if your home has a value of $500,000, your existing mortgage balance is $400,000 and you fall into the $75,000 homestead category, then $75,000 of the $100,000 equity cushion in your home is protected from creditors. This works in bankruptcy and out.
Here are the new limits:
- $75,000: Basic homestead for single person
- $100,000: Head of household
- $175,000: Over 65 or physically disabled or under 55 with less than $15,000 in annual income ($20,000 if married).
The full text of the statute appears below.
The exact numbers of the California Bankruptcy Exemptions will be released by the Judicial Council on or about April 1, 2010, and published by the Administrative office of the Courts. The actual published limits are harder than hens’ teeth to find on line, even if you know what you’re looking for. But here is the current published list of California “Current Dollar Amounts of Exemptions from the Enforcement of Judgments.” You can check back here on my site for an update when they release the new numbers on April 1, 2010.