July 20, 2012
A homestead exemption allows a homeowner to protect the equity in their home from attachment by creditors or from sale by a bankruptcy trustee.
“Equity” is defined as the difference between what the property is worth, and what is owed on the property. In other words, if my home is worth $100,000, and I owe $80,000 on my loan, I have $20,000 in equity in my home.
As of this writing, in Vermont homeowners can protect up to $125,000 in equity in their homestead. In New Hampshire a homeowner can protect up to $100,000 in equity in their homestead. The bonus in New Hampshire is that if a husband and wife own the property, each of them can take advantage of the $100,00 exemption, allowing them to protect up to $200,000 in equity. In Vermont, the homestead exemption cannot be doubled if a husband and wife are both homeowners.
In this economy it is rare to find someone with more than $100,000 in equity in their home. Consequently, I am generally able to protect someone’s home in a bankruptcy.