Homestead exemptions protect homeowners from forced sale of their home, debt collectors, property taxes, and foreclosure. Family property exemptions apply to primary residences and vary by state. Filing for bankruptcy may require a repayment plan. State laws for farm exemptions determine eligibility. Property exemptions may be adopted by default in some states, but homeowners may need to file a claim. Home improvement exemptions may not be allowed in some cases. States determine protection based on value or acreage, and landlords may collect proceeds if the amount owed exceeds the exemption.
A homestead exemption refers to a set of laws in the United States that protect homeowners from a forced sale of the home. It offers protection from debt collectors or creditors, provides an exemption from property taxes, and protects the surviving spouse from foreclosure. Homestead exemptions vary widely depending on the state in which you reside, so you should typically contact an attorney before attempting to file your application.
A family property exemption generally only applies to a property used as a primary residence. While state laws vary, federal law states that exemption cases filed typically cannot exceed $137,000 US dollars. In some cases, state law may be able to offer a higher exemption.
If the cost of the equity is not covered by the homestead exemption, it is possible that a trustee could sell the home if you file for chapter 7 bankruptcy. If this is the case, a chapter 13 bankruptcy filing might be suggested instead Filing under Chapter 13 would allow for a repayment plan that could span several years.
If there is no equity in the home, or if the equity does not exceed the exemption amount you determine, you can keep the home. Mortgage payments will still be required and the home will likely be subject to foreclosure if the payments are not met. These details are typically clarified once state laws for farm exemptions have been determined.
A resident typically files state farm waivers in the state in which he or she resided for two years prior to the filing date. If the resident has not maintained residency in a single state over the course of two years, the primary residence state is usually used. This typically translates to the state in which the resident has lived the majority of that time. Otherwise, state exemptions could become obsolete and eligibility could only be determined by federal law.
When a property is threatened with foreclosure, the property exemption may be adopted by default in some states. Most states, however, require the homeowner to file a claim within the state. Homeowners may be excluded from the property exemption if the property is vacated or if the primary residence is located elsewhere than the endangered property.
Many states do not allow home improvement exemptions if the mortgage is in danger of defaulting with the bank or for defaulted mechanic liens. States typically also determine whether property is protected based on monetary value or acreage. If the amount owed exceeds the amount covered by the exemption, some states may allow landlords to collect a portion of the proceeds from the sale of the property.
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