Filing Bankruptcy Forms? Don’t Overlook Your Home’s Appraised Value

Homeowners must be very accurate in completing bankruptcy forms, including the home itself. The amount of the property is a factor in determining equity and in the bankruptcy procedures. Knowing the value of your real property before you file bankruptcy can help avoid overselling and problems.

Why Your Home’s Value Matters When Filing Bankruptcy Forms

The amount of equity you have in your home can be impacted by your home’s value. In general, equity is the difference between the property’s value and what is owed on it.

When looking into exemptions or other considerations of how your property may be treated in bankruptcy, an accurate valuation can be significant.

How Is Your Home’s Value Determined in Bankruptcy?

Recent comparable sales, property condition, location, improvements and current market conditions could all be used to estimate a property’s value. An experienced “market analysis” can be informative, and the valuation technique used will depend upon the case’s specific needs and situations.

What Is a Bankruptcy Home Appraisal?

A bankruptcy home appraisal is the expert opinion regarding the value of a home in a bankruptcy context. The appraiser can visit the property and make comparisons with other homes that have sold recently. The appraisal can include supporting documentation that substantiates the market value of the property.

How Do Property Tax Assessments Differ From Market Value?

Property tax assessments are the primary source of calculating property tax and are not necessarily accurate of the home’s current market value.

Different Appraisal Method/Valuation Date may be used for the property tax appraiser and private real estate appraiser. A tax assessment, therefore, should not be presumed to be the property’s current market value in a bankruptcy proceeding.

Can You Use Equity in Your Home During Bankruptcy?

Understanding how to use equity in your home requires first determining how much equity exists.

For example:

Home value − Mortgage and other qualifying liens = Estimated equity

Whether that equity can be protected depends on applicable exemptions, state law, the bankruptcy chapter, and other circumstances.

What Documents Do You Need for a Bankruptcy Home Appraisal?

An appraiser may request:

• Property information
• Recent tax records
• Mortgage information
• Details about improvements
• Recent repair records
• Property photos
• Relevant sales information

Providing accurate information can help the appraiser develop a more reliable valuation.

How a Real Estate Professional Can Help With Valuation

A real estate professional can offer data on recent comparable home sales, market conditions, features, and possible selling prices.

But an opinion or a market analysis of a real estate does not necessarily constitute a bankruptcy forms appraisal. The type of valuation will depend on the type of bankruptcy that is being filed.

Does Home Value Matter When Filing Chapter 7?

Equity can be a significant factor in the Chapter 7 situation, as it can influence whether the property can be exempted or not. Each state and individual case is different. A bankruptcy attorney will be able to describe how applicable exemptions and other laws might influence the home.

What Happens If You Disagree With the Property Value?

If you feel the property value is incorrect, collect evidence for or against the amount on the property value. This can be assisted by recent comparable sales, professional appraisal, property condition reports and other information.

A protest of property taxes and a valuation for bankruptcy will be two different things, and a protest of a tax valuation does not automatically place a bankruptcy valuation on the property.

When Should You Get a Home Appraisal Before Bankruptcy Filing?

If the value of the property is not known, equity may be a factor in exemptions, and/or there is a significant disparity between the tax records and market conditions, consider getting and appraisal before filing bankruptcy.

Talk to your lawyer about when and for what the valuation will be used so that this is taken into account in the process.

Conclusion

One of the key components to filling out bankruptcy forms accurately is having the correct information. This can influence the way a home is treated due to its market value, mortgage amount, and equity.

Before applying for bankruptcies, a professional appraisal, relevant market analysis and guidance from a bankruptcy attorney can help you get a better picture of the value of the property.

Frequently Asked Questions

Do I need a home appraisal when filing bankruptcy forms?

Not every bankruptcy case requires a bankruptcy forms. However, an appraisal may be useful when the property’s value is disputed, uncertain, or important to determining available equity and exemptions.

How is real property valued in bankruptcy?

Real property may be valued using comparable sales, property condition, location, improvements, and current market evidence. The appropriate valuation method depends on the case and applicable requirements.

Does a property tax assessment show the true market value?

Not necessarily. A property tax assessment is generally created for tax purposes and may differ from the property’s current fair market value based on market conditions.

How do I calculate the equity in my home?

A basic calculation is the home’s estimated market value minus the outstanding mortgage and other qualifying liens. Applicable exemptions and bankruptcy rules determine how that equity is treated.

Can home equity affect Chapter 7 bankruptcy?

Yes. Home equity may affect whether a property is fully protected by applicable exemptions. State law, the amount of equity, and individual circumstances can all influence the outcome.

What is a bankruptcy home appraisal?

It is a professional valuation of a home prepared for a bankruptcy-related purpose. The appraiser generally considers the property’s condition, location, comparable sales, and market conditions.

Can a property tax appraiser determine my home’s bankruptcy value?

A tax assessment may provide useful information, but it does not necessarily establish current market value for bankruptcy. A separate professional appraisal may be appropriate.

Can I challenge a property valuation?

If you believe the valuation is inaccurate, you may be able to provide evidence such as recent comparable sales or another professional appraisal. Discuss the appropriate process with your attorney.

Should I work with a bankruptcy attorney?

Bankruptcy laws and exemptions can be complicated. A bankruptcy attorney can help explain applicable rules, review your assets and debts, and advise you about how your home’s value may affect your case.

Are home values different for different types of bankruptcies?

Yes. Different types of bankruptcies have different rules and procedures. How home equity is treated can depend on the bankruptcy chapter, applicable exemptions, and individual financial circumstances.