Housing prices are on the rise. File bankruptcy before you get too much equity in your home.

Housing prices are on the rise nationally.  Some markets and some states still have depressed prices but they are on the rise in most areas.  Here in San Diego housing prices are rising rapidly especially in certain neighborhoods.  In San Diego some of that increase is due the economy getting better but that is not the only factor that is causing housing prices to rise here.

It is also a supply and demand problem.  There is a shortage in this city of supply of homes on the market.  I have been told by realtors that the shortage exists because homeowners are expecting housing prices to rise further so they are holding homes off the market.

It does not matter what the reason is for the housing price rise.  It is important that prices are indeed rising.  Soon many more people will gain equity in their homes which is normally a good thing.  But if you have credit card or other debts and you cannot pay them then you might be considering bankruptcy.

If it is true that you are looking to file a bankruptcy eventually then it might be the time now to move forward with it.  If your home continues to rise in price you will eventually have equity in your home again.  But this equity in your home could create problems for your bankruptcy filing.

If the equity rises past your ability to protect it with the allowable bankruptcy exemptions then your home may be in jeopardy if you file bankruptcy.  This is because the trustee could take it and sell it for the equity in it.  If you move quickly before this happens then you can usually protect your equity.

I am a San Diego bankruptcy attorney.  For further questions please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation or for any other advice about bankruptcy or debt at (619) 702-5015. Call now for free credit report and analysis!

For a free e-book on “13 things to do to prepare for your bankruptcy filing” please e-mail me at farquharesq@yahoo.com.

What is community property and how does it affect my bankrupty?

property 3Community property is, in short, the property you and your spouse acquired while you were married.  It includes any real estate and property 5personal property that you bought while you were married.  So cars, clothes, jewelry, furniture are all considered community property if they were acquired while you were married.  Real estate acquired during the marriage is considered community property in the same way.

It gets a little more complicated when you have a piece of real estate that was yours alone prior to the marriage.  If you get married after you bought the property your new spouse can gain (over time) a community interest in your real estate.

Real estate requires the regular and continuous paying of fees for maintenance, taxes, and even the mortgage payment.  Even if you continue to pay these yourself (with no contribution from your new spouse) your spouse is getting a growing community interest as you make those maintenance payments.

The money you use to pay these ongoing property expenses are community funds even if the funds come from income you earn alone.  This is because every dollar you earn during your marriage is half owned by your spouse.  This works both ways as every dollar your spouse earns is half yours too.  Therefore if you are married and the only one working and you pay these expenses out of your income alone on property that was yours before the marriage, your spouse is still getting a gradual community interest.

So when it comes time to file bankruptcy the trustee will want to know if you are married.  If you are then community property issues arise and he will ask questions about any property you or your spouse own individually or together.  If your spouse files bankruptcy and you do not your spouse may have a community interest in your real estate.  This will be true even if your spouse did nothing to and for the property.

These issues can get complicated so you need an attorney to analyze your property and your spouse’s to see if there are any community property issues.  Property can and will be seized and sold by a trustee if there is any value owned by the person filing bankruptcy if that value is not properly exempted.

Community property does not include property that you alone inherited and that you have kept segregated and separated from your spouse’s property.  If you have not commingled that property with your spouse then that property can be considered separate and not community for bankruptcy and other purposes.

But if you inherited real estate it may have started out as separate property but it may lose its separate property nature over time.  Again as you pay on it you may be giving your spouse a community interest even in separate property that was inherited by you.

There are other issues related to community property such as whether you gifted property to a spouse by putting the title it in their name.  If you do put a spouse on title then there is a presumption of gift and depending upon how title is held that property will probably be considered half owned by the spouse.  It would then lose its separate property status.

I am a San Diego bankruptcy attorney.  For further questions please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation or for any other advice about bankruptcy or debt at (619) 702-5015.  Call now for free credit report and analysis!

For a free e-book on “13 things to do to prepare for your bankruptcy filing” please e-mail me at farquharesq@yahoo.com.

 

Private property photo courtesy of hworks.  House photo courtesy of danzoO8.

A new wave of foreclosures is expected while housing prices decline for 6th staight month. What does it mean?

According to an article in Smart Money last month foreclosure sales are still flooding the real estate market in America.  35% of all home sales in January were foreclosed homes or for short sales.  This amounts to 91,100 properties in January and this number was up 29% from the month before.

The head of a real estate research firm predicted that this will cause a decrease in prices for homes in the next year.  Statistics have indeed showed that the median home price has declined 8.5% since June of 2011.  This same analyst predicted in the article that home prices are going to go down for a long time to come.

In the city of  Las Vegas foreclosures accounted for 59% of all sales and in Sacramento 50% according analysis done by RealtyTrac.  Other cities have similar statistics.  There is a huge number of foreclosures coming back to the banks currently and these foreclosures are then going back on the market for sale.  This flood of foreclosures will continue to press home prices lower in the future according to analysts.

This is exactly what an article in Yahoo Finance stated yesterday.  According to that article home prices dropped for the 6th straight month in a row.  The Case-Shiller housing price index reports that housing prices dropped in February in 16 out of the 20 cities tracked.  Atlanta, Chicago and Cleveland saw the worst declines while San Diego and Phoenix saw price increases.  This represents a 35% decline in home prices since the recession hit and home prices are now at 2002 levels.

Another article came out in Reuters that a new wave of foreclosures is expected.  In that article they predict that 2012 will be a bigger year for foreclosures than 2011.  Just when you thought it was over.  But it is not over.  Many in the article predict a growing number of foreclosures ahead.  They point to the statistics that show that many major banks and many major cities are showing a rise in foreclosures.

The Reuters article points out that the toxic mortgages are now gone.  Sub-prime, and balloon payments, and negative amortization mortgages have been foreclosed on or short sold and are no longer in effect.  Now we have regular mortgages that are being foreclosed on.  Mortgages with normal interest rates and fixed rates for 30 years.  Mortgages that are owned by regular working families.  Families who are extremely responsible but still can’t afford the mortgage.

These people are being stressed now.  They cannot afford the mortgages I argue because the price of everything is going up especially food and energy which are not counted in government inflation statistics.  That is what I argue in this blog http://bit.ly/HUNMNJ .

But it is clear that the housing/foreclosure is not ending but may get worse and be with us for some time.  I believe that we underestimated the depth of the crisis from the beginning.  I had realtor tell me years ago that this was serious.  At a realtors convention he was told to expect 10 years of depressed prices in real estate.

The amount of foreclosures is astounding and these all have to be put on the market at some time and they will depress it.  Indeed there appears to be a shadow market of these homes that the banks are holding off the market as I argue here  http://bit.ly/IUF0k0.  When these homes are put on the market instead of being kept off, prices could decline further.

So with home prices declining, foreclosures increasing, and prices of living increasing we have a perfectly bad storm it appears.  The government printing of money and the resulting devaluation of currency is increasing prices of food and energy so that people can’t afford their homes.  This stresses their finances so they cannot afford their homes which leads to more foreclosures and more homes on the market.  We seem to be in a downward spiral economically.  Don’t expect housing prices to go up anytime soon.  It is also a good time to take care of unneeded unsecured debt do you can afford to pay for your home.

I am a San Diego bankruptcy attorney.  Please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com for more info. about any of these topics.  Or call my office for a free consultation at (619) 702-5015.  Call now for a free credit report and analysis!

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.