S OF A HOMESTEAD DECLARATION?

The main benefit is that if you voluntarily decide to sell your house, the equit y upon sale is protected up to the dollar amount equal to your applicable homest ead exemption, for up to six months, for reinvestment in another homestead. For example, if your homestead exemption allows you an exemption up to $75,000, then when you sell your house, your equity from the sale will be protected from judg ments in the amount of $75,000 for up to six months. To better understand this b enefit, consider the following change to the above example: Example: You still have a judgment against you. You have NOT recorded a declared homestead. However, instead of the judgment creditor forcing the sale of your h ouse as in the above example, you decided to voluntarily sell your house. First the home loan would get paid just like above. However, next to get paid would be the judgment creditor - in the amount of $100,000 - you would not get anything! You have lost all your equity. However, if you had recorded a declared homestea d, then you would get $75,000 from the voluntary sale of your house. Your $75,00 0 would be safe for up to six months. During the six months, you can reinvest your protected proceeds from the sale in another house and file a new declared homestead for that new house. Your protec tion would run from the date of your original declared homestead. This process d oes not prevent the judgment lien from attaching to the new house if the judgmen t lien is also recorded in the county in which the new house is located. If you owned another property and declared that other property as your homestead during the six month period, the proceeds are no longer protected. Also, if you do reinvest the proceeds in another homestead within the six months, the procee ds will no longer be protected. A similar benefit of the declared homestead exists in the case your house is sol d at foreclosure sale. If you can't make your monthly mortgage payments, the ban k will forecloses on your house. Unless you have declared your homestead, the ho mestead exemption does not operate to protect some equity from judgment creditor s in the event of a foreclosure sale. Thus if there is a judgment lien against y our house, at a foreclosure sale, the judgment lien will get paid before you. Ho wever, if you record a homestead declaration before the judgment lien is created , then your equity will be protected through the foreclosure sale up to the appl icable exemption amount for up to six months. PLEASE REMEMBER, RECORDING A HOMESTEAD DECLARATION DOES NOT AFFECT A CREDITORS R IGHT TO TRY AND FORCE THE SALE OF YOUR HOUSE. IT IS NOT AN ABSOLUTE PROTECTION F OR YOUR HOMESTEAD, BUT IT WILL PROTECT SOME OF YOUR HOME EQUITY.

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