Legal Question in Bankruptcy in Kentucky

When a home is foreclosed upon, it goes to an auction. At the autction, the lender is usually there to make sure their interest is protected and so they will bid on the property. However, no one will be there to make sure the home sells for anything over that amount so you would be wasting your exemption by applying it to the home. Rather, you can use a little over $10,000.00 of your homestead exemption (over $20,000.00 for a married couple) to cover other assets if you are surrendering your home.

Based on the numbers you gave in your question, it might be possible to use a Chapter 13 bankruptcy to save your home, so the first question will be whether you want to try to save your home. This type of bankruptcy puts you on a payment plan to pay off your past-due mortgage payments. The legal fee is also paid during the payment plan, so you do not need to pay the legal fee up front.

Another option is to sell your home yourself before the foreclose sale. A Chapter 7 bankruptcy can give you some time (several months) to try to do this. If you sell the home yourself, you keep the home equity, and I believe homes in your price range are still selling. A Chapter 7 bankruptcy will also liquidate most of your other debts. This is the better option if you decide to let your home go.

Mary Cartwright

Smith & Cartwright LLC

455 South Fourth, Suite 506

Louisville, KY 40202

502-618-2486