What if I File Bankruptcy AFTER I Leave My Spouse and Home?

by Peter Orville, Binghamton Bankruptcy Lawyer

January 25, 2010

If you are planning on filing for bankruptcy soon after moving out of your marital residence, there are some potentially serious issues to consider.  While filing for bankruptcy soon after separating from your spouse and leaving your home is entirely permissible, you should be sure you are fully aware of the consequences, particularly if you have equity in your home.

By leaving your marital residence you may not be able to claim a homestead exemption, which means you may not be able to protect the equity in your home. In New York, for example, if you are eligible for a homestead exemption, you are allowed to exempt $50,000.00 of equity in your personal residence.  If your home is worth more than you owe on it, the home may be sold and your portion of its equity may go to a trustee and your creditors.

Generally, you can only take the homestead exemption if you reside on the property at the time you file your bankruptcy case.  There are some exceptions however…

    *if you vacated your house while it is being repaired but your intention is to move back in when the work is done… 

     *if you are temporarily unable to live in your home because you are in jail…

     *if you are the victim of domestic violence and you moved out until your marital issues are resolved. 

If you simply move out of your home before you file bankruptcy, with no intention of moving back, it may cost you more than you can imagine. 

Before making any hasty moves right before filing for bankruptcy, you should contact an experienced and knowledgeable bankruptcy attorney and fully review your options.

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Peter Orville is a bankruptcy lawyer in Binghamton, located in the Southern Tier of New York. He is a member and New York co-chair of the National Association of Consumer Bankruptcy Attorneys.

Last modified: January 25, 2010