Bankruptcy Trustee

• A Trustee is assigned to all bankruptcy cases. The Trustee will review your bankruptcy petition and determine if you qualify for bankruptcy, what items you can keep, what items you have to turn over and the amount of debt you will have to repay. The Trustee will follow the laws in your state for exemption amounts and your state's laws will help him determine if you can keep your house of if you will lose it.
  
  

Exemptions

• Each state sets the exemptions for bankruptcy. Your house is included in the homestead portion of the exemptions. Check bcsalliance.com for exemptions in your state. You must have less equity in your home than the state's exemptions allow. For example, if your state allows a homestead exemption of $85,000 and you have $35,000 in equity, you can keep your house. Having $95,000 will require you to work with your Trustee. If the Trustee sees a lot of equity, he has the right to order the house sold and use the profits to repay your debt.
  
  

Wild Card Exemption

• A wild card exemption is available in some states. This amount is generally low, but it may be enough to let you keep your home. A wild card exemption can be used on any item you wish to keep and can even be split between property. For example: your state allows an $85,000 homestead exemption and you have $88,000 in equity. Your state also offers a wild card exemption of $3,000 or greater, which you can apply to the homestead exemption. Now your equity is covered between the homestead and wild card exemptions and will be exempt in the bankruptcy. This means you can keep the house.
  
  

Reaffirming Debt

• The bankruptcy process allows you to reaffirm debt in some circumstances. Mortgages and auto loans are often reaffirmed. The Trustee must approve the reaffirmation and this will depend on the cost of the mortgage and if he feels you can afford it. Having an $800 payment for a Mercedes-Benz may not be approved, as the Trustee may see this as an extravagant, unnecessary expense. The same holds true for mortgages. You must remember that the Trustee holds the power in all bankruptcies and everything must be approved by the Trustee.