filed under chapter 13<\/a>, the bankruptcy trustee won\u2019t sell your property but, you will have to pay an amount equal to the non-exempt portion of the property through your repayment plan. In case the non-exempt equity is less, it isn\u2019t an issue. However, if the non-exempt equity in your home is immense and you don\u2019t have an income to support the repayment, the court is highly unlikely to approve your 3-5 year repayment plan.<\/p>\nRole of Bankruptcy Trustee<\/strong><\/p>\nBankruptcy trustee is a court appointed official to review the paperwork (both filed in the court and other additional documents known as 521 documents) and administer the entire bankruptcy proceedings. The 521 documents include bank statements, pay check stubs, income tax returns and other documents which may have an effect on bankruptcy proceedings like mortgage statements, car loan or settlement agreement post-divorce. It is mandatory for all bankruptcy filers to attend a minimum of one court appearance known as 341 meeting of creditors, where the trustee can:<\/p>\n
\n- Place you under oath<\/li>\n
- Verify your identity and authenticity of your bankruptcy petition<\/li>\n
- Enquire about any unusual details found in bankruptcy paperwork<\/li>\n
- Ask standard questions<\/li>\n
- Allow creditors present to ask questions pertaining to your case<\/li>\n<\/ul>\n
While a chapter 7 trustee will sell all non-exempt property and dispense the proceeds to the creditors, the chapter 13 trustee won\u2019t do so. In the latter case, the trustee evaluates your 3-5 year repayment plan (including whether you are paying for non-exempt property or not). In case, it doesn\u2019t meet the mandatory requirements, the trustee files an objection in the court against it and will argue the same at confirmation hearing. If the plan meets the required criteria, it is approved by the trustee and he\/she will distribute monthly payments to creditors.<\/p>\n
Homestead Exemption & Domicile Requirement<\/strong><\/p>\nThe homestead exemption varies from state to state. The federal law also provides a federal exemption system, however, many states do not allow the bankruptcy filer a choice between the state and federal schemes. Some states allow very high or unlimited homestead exemption, but a majority of them protect a moderate amount of equity, while some others don\u2019t offer any. It is recommended to find out the homestead exemption amount in your state as well as whether you can opt for federal bankruptcy exemptions or not.<\/p>\n
Since many people shield assets by either buying property in states with unlimited homestead exemption or moving them to other states, strict federal laws are in place for homestead exemptions. It is therefore mandatory that your home should have been purchased at least 40 months prior to filing for bankruptcy. In case this condition is not met, the homestead exemption under federal law is capped at $170350 irrespective of the state exemption amount (as of 1st<\/sup> April 2019 and $160375 for cases filed between 1st<\/sup> April 2016 \u2013 31st<\/sup> March 2019). The homestead exemption remains the same ($175350) if you have committed bankruptcy fraud or any other related crime.<\/p>\n\n