How the Hot Housing Market Impacts Your Bankruptcy (2021)

TL;DR

The hot housing market is causing issues for people filing for chapter seven bankruptcy as their homes have appreciated in value, potentially leading to the sale of their homes.

Transcript

• Hey everybody, John Skiba here, and in this video, I'm going to talk about this red hot housing market and how it could impact your bankruptcy. But if this is your first time here to my YouTube channel, please click subscribe. That way you'll be notified each and every week when I put out a new video that'll help you deal with your serious debt p... Read More

Key Insights

• 🥺 The 2020 pandemic did not lead to the expected surge in bankruptcy filings due to various factors, such as government aid and loan forbearance.
• 💥 The 2021 housing market boom has resulted in increased equity in homes, causing potential complications for individuals filing for chapter seven bankruptcy.
• 👪 Homeowners considering bankruptcy should consult with an attorney to assess the risk of losing their homes due to increased home equity.
• 👪 Evaluating the current value of the home through a real estate broker is crucial to understanding the potential implications of filing for bankruptcy.
• 👪 The homestead exemption protects homes in bankruptcy, but there are limits to the amount of equity that can be exempted, varying by state.
• 👪 Appraisals may not accurately reflect a home's market value, so consulting with a real estate broker is crucial.
• 😥 Online platforms like Zillow can provide a starting point for estimating a home's value but should be supplemented with professional advice.

Questions & Answers

Q: Why were bankruptcy filings lower than expected in 2020?

The combination of stimulus money, loan forbearance, and creditors holding off on foreclosure and repossession resulted in lower bankruptcy filings in 2020.

Q: How does a hot housing market impact chapter seven bankruptcy filings?

The appreciation in home value may lead to homeowners having more equity in their homes than the allowed exemption amount, putting their homes at risk of being sold by the bankruptcy trustee.

Q: What is the role of the homestead exemption in chapter seven bankruptcy?

The homestead exemption protects a homeowner's primary residence, but there is usually a limit on the amount of equity that can be protected in each state.

Q: How can homeowners determine their home's value for bankruptcy purposes?

It is recommended to consult with a real estate broker to get an accurate current valuation of the home, as opposed to relying solely on appraisals or online platforms like Zillow.

Summary & Key Takeaways

• Despite expectations of an increase in bankruptcy filings during the pandemic, 2020 had the lowest number of bankruptcy filings in the past 14 years due to factors such as stimulus money and loan forbearance.

• The 2021 housing market boom has resulted in homes selling for over asking prices with cash bids, causing homeowners who need to file for bankruptcy to face potential issues with their home equity.

• Chapter seven bankruptcy eliminates credit card debt and medical bills, but if a homeowner has more equity in their home than the allowed exemption amount, the bankruptcy trustee may force the sale of their home to pay off creditors.