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In Chapter 7 Bankruptcy can you use the Homestead Federal Bankruptcy Exemption to keep your 120000paid off condominium with a lien against it for an 11000credit card debt in pa?
Mogelann
Your right that PA has no special homestead exemption for BK and you would rely on the Federal one. The lien (the Cr Card one), is essentially the same as a first position mortgage against the property. The Federal exemption is $125,000 of equity...but there are twists and turns....like how it can reduce by the amount of other things you have exempted or sold in the past years, timing of ownership, other debts and such. Although in what your saying I'm not sure this would be a problem. However, in a pragmatic sense, I don't think your going to find this really a great solution either. The courts are going to be less than sympathetic to simply discharge 11K (a fairly small sum) of debts for someone who otherwise seems not only well set, but to many rich! Understand you can't only go BK on the credit cards....BK will effect everything you own and everything you owe...hence, whatever your income is from could reasonably be used to pay the debt, (agreeably they can't seize a retirement account, but they can garnish from it), and you probably have some other savings or investments....or assets....all of which will be fair game to pay your credit card debt...and the costs of BK. Which is the other point, as you have enough to worry about losing...and frankly little to gain....you certainly need a lawyer to handle it....and after his and court fee's....and that the debt won't be reduced (rather increased by fees).....your going to pay alot to try and get out of a 11K debt. The most I think you can expect is for the lien to remain in place, and grow with any missed payments, accrued suoer high interest, and fees, until they take the money from when you sell the property, or it goes up in value and they force the sale and basically had you the first 125K. Then there is also the reality, if debts like this have become impossible enough to handle that you require BK.....your financial life needs to be reorganized and the will likely require freeing up the equity in the house one way or another...you may want to look at a government back Reverse Equity Mortgage.
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