Student Series: It’s Not That Simple

Last week the student teams had their first meeting of the semester for the Financial Distress Research Project. And they’re pushing ahead on self-help materials! In addition to tackling the Lab’s mission to bring empirical thinking to the legal profession, students are trying their hand at understanding the alphabet soup of bankruptcy forms in order to craft the best self-help materials. It turns out, this can involve a lot of math (sometimes more math than law). Whether it’s calculating home costs, income and benefits to figure out how to apply for fee waivers, or determining what exemptions to claim, students are trying to navigate how best to represent these tasks, concisely and clearly, in self-help materials. Throughout the semester we’ll be continuing this series of student blog posts where students will talk about their work on A2J Lab projects.

Our fourth student blogger is 2L Zain Rifat, who works on the Bankruptcy team of the Financial Distress Research Project.

From Zain:

Can I Keep My Home?

PrintWhat do you need to know so you can keep your home in a bankruptcy proceeding? Equity. That’s it. Straightforward enough, right?

Unfortunately, determining equity is not. You first have to calculate the value of your home. Without an appraiser, you’ll probably have to get an estimate online. Sites like provide such approximations. Let’s call the value of your home “A.”

Next, you’ll have to find out how much you owe. To start, calculate the mortgage on the home. You can do this by using a bill from the mortgage company, specifically search for “outstanding mortgage” on the bill. Add the outstanding mortgage to any tax or contractor liens against you. This is what you owe. Let’s call what you owe “B.”

Now, subtract B from A to find your equity [(A – B) = equity]. If your equity is below or equal to $24,925, which is the federal amount, you are in luck. You can keep your home! Amounts slightly over, say $27,925 or less, can go either way. If you are significantly over, you’ll probably lose your home.

The equity calculation, even at its simplest, is problematic. Websites might not provide an accurate estimate, and when you factor in various state laws, which have different equity requirements, the complexity is too high. It’s no surprise that, overwhelmingly, those who want to keep their home use a specialized lawyer. But there aren’t enough lawyers to go around. Nowhere near. Thus the Financial Distress Research Project’s effort to create self-help materials.

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