As everyone in Georgia knows, home values have been falling this past year. On the down side, this means that borrowing on the equity of your home is difficult  and if you are trying sell, you may not be able to get the price you need.

People all across Northwest Georgia, from Dalton to Rome, Cartersville, Hiram and Dallas have gasped in agony at the tumble in home values.

From a bankruptcy perspective, falling home values have helped many debtors.  The biggest upside to falling home values is that it gives many Chapter 13 debtors the opportunity to eliminate their second mortgage on their homes. If your house is worth less than what you owe on the first mortgage, you can eliminate the second mortgage in a Chapter 13 bankruptcy case. For a more detailed explanation of how this process works, click here.

Another upside of the falling homes values is that Chapter 7 bankruptcy has become much easier for many debtors.  During the housing boom, there were many debtors who needed to file for bankruptcy but could not do so because they had too much equity in their homes.  For example, married couples with more than $20,000 equity in Georgia should not file Chapter 7   In situations where the equity exceeds what can be protected by Georgia law, a Chapter 7 trustee can put a house up for sale and use excess proceeds to pay creditors.

During the housing boom, it was not uncommon to see a Chapter 7 trustee challenge the value that a debtor listed on their home.  Today, with the tremendous drop in housing values, I not personally seen trustee challenge the home values listed on the bankruptcy petition.

A great place to start when trying the determine the fair market value of your home is your tax assessor.  Take a look at your most recent tax bill.  How much did they list as the estimated fair market value?  In the past, we could not rely on this value but most tax assessors had underestimated the fair market value.  Today, this is no longer the case.

I had a recent bankruptcy case where the county tax assessor had actually overvalued the property by $40,000.00.  In this particular case, the debtor obtained an expert appraisal and overcame a creditor objection.

If you would like to explore your bankruptcy options, please do not hesitate to call me at 706-295-0030.

Related Posts:

1.  How do I wipe out my second mortgage in bankruptcy?

2. What is Chapter 13?

3. What is Chapter 7?

4. How much does it cost to file?

If you miss a few mortgage payments while you are in Chapter 13 in the Northern District of Georgia, the attorneys for the mortgage company will file a Motion for Relief against you.  They will charge you approximately $800 for filing this motion.  Generally, we can work out a deal with them to put their attorney fees into your Chapter 13 plan and spread out the missed payments over six months.  If this is not feasible, the motion will be granted and your house will be foreclosed. 

You must keep proof of all mortgage payments you make. If you don’t have proof of the payment, you may get stuck having to make it again.

Call me if you have any questions.