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Our customers ask us many great questions related to bankruptcy filing. A recent customer at our Woodland Hills location asked us to prepare and file a homestead, after being advised to do so by her bankruptcy attorney. Her Woodland Hills property is “underwater” as they say, meaning she owes more to the mortgage company that the property is worth. In reviewing the homestead declaration she hesitated to sign because it reads that she owns a 100% interest in the property.
Truth is it doesn’t matter if there is a mortgage, a line of credit or liens. The owner on title is still 100% owner of the Woodland Hills property. So she can go ahead and execute the homestead and safely declare she is 100% owner.
She can’t protect against the mortgage-holder foreclosing, but she can protect against other creditors forcing a sale for equity up to the exemption level. Obviously, since the property is upside down, there is no equity, so no forced sale should be able to occur with a homestead exemption in place (other than a foreclosure). But if they forced a sale, they would not receive anything anyway, since their lien would not be first in line anyway. The homestead does send a signal to creditors that it may not be worth their while.
The Document People is a network of independently owned stores that share a common purpose: helping customers represent themselves. We are looking forward to offering you bankruptcy filing assistance. We serve Woodland Hills, Encino, The San Fernando Valley, Orange County and San Diego County.
The information contained in this blog – including information of a legal nature – is provided for informational purposes only, and should not be construed as legal advice on any subject matter.