You need to know the fair market value of your house when you file bankruptcy in the northern District of Georgia.
The United States Bankruptcy Code requires you, the bankruptcy filer, to disclosure all of the details of your financial life. The forms we fill out – your bankruptcy petition – are developed by a committee of judges, lawyers, law professors and officials from the Department of Justice appointed by the United States Supreme Court.
Bankruptcy Schedules Require Full Disclosure
Over the past 25+ years, the official bankruptcy petition forms have been updated and amended and each time, the changes result in additional disclosure by bankruptcy filers. So the trend in the bankruptcy world is definitely towards increased transparency and disclosure.
On Schedules A and B of your petition, we are required to identify everything that you own. These schedules are reviewed by the bankruptcy trustee assigned to your case and if information is incomplete or inaccurate, the trustee could object to your bankruptcy, or, in extreme cases, refer your case to the U.S. Attorney for criminal prosecution.
This is why you must be completely transparent and honest with your attorney. Trustees have access to electronic databases and if you mistakenly or intentionally omit your disclosure of a significant assset, big problems could arise. If you are not sure about whether you own an asset (i.e., you think that a relative may have left you something in her will, or your name may have been added to a deed somewhere), discuss with your lawyer.
Our experience has been that trustees are most concerned about the value of “big ticket” assets like your house and motor vehicle. The market value of cars and trucks is fairly easy to determine – the NADA publishes a valuation guide and websites like Autotrader or Carmax can reveal the approximate valuation of any motor vehicle.
Your Home’s Value is Unique
Homes, however, are unique in that the value of a particular home will depend on a variety of factors, including its condition, its configuration, its location on a street, and the price trend of a particular neighborhood at a particular time.
For many reasons, you do not want to find yourself in a situation where you estimate the value of your home at, for example, $200,000, only to find that the trustee estimates $275,000.
How to Calculate Your Equity in Your Home
At Ginsberg Law, we advise our clients to take several steps to narrow down the estimated valuation to a number that can be defended. It it not enough anymore to use a tax appraisal number from the past year or two (tax appraisals are not a good resource).
First, we recommend that you enter your home address into Zillow.com. Bankruptcy trustees often start with Zillow so you should as well.
Second, we suggest that you identify any needed repairs, especially repairs that are likely to be necessary within the next year or two. Items such as a roof replacement, HVAC repair or replacement, mold remediation, foundation repair can costs thousands or tens of thousands of dollars and will reduce the fair market value of your home.
Third, we recommend that you contact a local real estate agent and ask for a “drive by” appraisal that takes into account any needed repairs. Get this appraisal in writing.
With actual documentation, you and your attorney will have an answer to any argument by the trustee that your house is worth more than it actually is.
