Real estate values have been on a steady rise in the few recent years. Homes are flying off of the market as soon as they are listed and many homeowners are now sitting with a good deal of equity in their home that they have not seen in quite some time because the crash of 2008 brought home values to record lows.
This is good news for a lot of people in Michigan. However, it can be bad news for individuals who are currently faced with a divorce or bankruptcy.
Depending on what side of a divorce you are on, the rising home values can be a good thing or a bad thing. When a married couple goes through a divorce in the state of Michigan, many times they own a home together and one of the parties would like to remain living in the marital home. In this case, the individual that wants to remain in the home will most likely have to get the home appraised and then pay their soon-to-be ex a lump sum of cash for their half of the equity in the home.
The more home values rise, the more cash will have to be paid out to stay in your home. Usually this cash can be paid by taking out a home equity loan on the house or taking money from a retirement account. However, these options may not be available in every situation because of inability to obtain a loan or insufficient funds in retirement accounts.
If an individual cannot come up with the needed cash to pay the other party their share of the equity in the home, there is most likely no choice but to sell the home. In this instance the parties would more likely than not equally split the proceeds received from the sale and they would each have to find a new place to live.
This is just one small issue that can arise in a divorce case. There are many risks and setbacks that can happen during a divorce case and it is always a good idea to have an attorney on your side that has experience in these situations.
Nobody ever wants to file a bankruptcy; however, sometimes you are left no choice because of events that are out of your control. All individuals that are facing bankruptcy and own interest in any type of real estate in the state of Michigan should get an accurate estimate of what the current value of the real estate is.
When filing bankruptcy, the bankruptcy court has very strong powers to possibly take your property from you and sell it if the property has too much equity. They do not need your permission.
Therefore, if your home has increased in value and you do not know the actual value, the bankruptcy Trustee can obtain their own appraisal and sell your home if there is a substantial amount of equity. The money would then be used to pay down your debt for you, and you would have to find a new place to live.
It is always to a good idea to hire an attorney with knowledge of these types of situations and powers that the bankruptcy court has. The key to avoiding this problem is completing a thorough analysis of your situation with an attorney before filing a bankruptcy case.
– Kory K. Shimek – Attorney and Owner of Shimek Law Firm, PLLC