When you file Chapter 7 Bankruptcy, your home equity is protected under the homestead exemption, which is a law that protects your home. The amount protected in Colorado is $60,000, or $90,000 if you are over 60 or are disabled.
Since values were flat after 2008, and most folks had little or no equity in their homes, there was less focus on this question than there is now with a sharply increasing real estate market in the Denver area. Now some folks are bumping up against this limit, or possibly exceeded it causing a problem with protecting the home in bankruptcy.
However, there are many ways to value a home. Condition, location, neighborhood, comparable sales, and assessed value–all play into this calculation.
This is why, if you own a home, it is more important than ever to consult with an experienced bankruptcy lawyer to review this issue before you file. If you have questions about bankruptcy and home equity contact me today.
