Under MN law, the maximum homestead exemption is $200K for a single or joint bankruptcy filing. Assume the house title is in both the husband and wife's name and was purchased 5 years ago. Let's say the wife has a single judgement from one creditor against her "only" resulting from a lawsuit for $250K. Let's assume the house is worth $750K and there is a first and second mortgage on the house totaling approximately $400K. Would the husband be entitled to 1/2 the equity in the house, ($350K/2=$175K) and the wife up to the $200K exemption ($175K)? Would the husband and wife both be guaranteed the $200K exemption because of the single filing and the other spouse not liable for the judgement?
Say the house is worth $1M, my understanding would be that the husband would be entitled to 1/2 the equity or ($600K/2=$300K) and the wife would be entitled to the $200K maximum homestead exemption. Thus, the creditor could get $100K if there was a forced sale of the primary residence? Could a sale be forced if the husband has no debt, had nothing to do with the lawsuit or judgement and wants to keep the house? What strategy could be done to keep the house from a sale, if any? If the value of the house is say $800K, it appears that $200K would go to the husband and the $200k exemption would go to the wife resulting in no proceeds to a creditor which would not force a sale being the entire home equity would be exempt? It would appear that the spouse not in debt should be entitled to 1/2 the equity in the house regardless.
If this is not the case it wouldn't it make better sense for the married couple to get divorced, if there is a large equity in a property, in order for the other spouse to get the 1/2 equity in the house? They could later remarry and keep a lot of cash?
Any comments on this?
Say the house is worth $1M, my understanding would be that the husband would be entitled to 1/2 the equity or ($600K/2=$300K) and the wife would be entitled to the $200K maximum homestead exemption. Thus, the creditor could get $100K if there was a forced sale of the primary residence? Could a sale be forced if the husband has no debt, had nothing to do with the lawsuit or judgement and wants to keep the house? What strategy could be done to keep the house from a sale, if any? If the value of the house is say $800K, it appears that $200K would go to the husband and the $200k exemption would go to the wife resulting in no proceeds to a creditor which would not force a sale being the entire home equity would be exempt? It would appear that the spouse not in debt should be entitled to 1/2 the equity in the house regardless.
If this is not the case it wouldn't it make better sense for the married couple to get divorced, if there is a large equity in a property, in order for the other spouse to get the 1/2 equity in the house? They could later remarry and keep a lot of cash?
Any comments on this?