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Message #603 Protecting your home from creditors

mp3 #603 Your Home From Creditors (mp3 file)

The term "homesteading" may evoke a picture in your mind of covered wagons in the Oklahoma territory, racing out to grab a parcel of free government land. Or you may have visions of the old family homestead where the relatives gather at Christmas-time or for holidays and reunions. But homesteading means something entirely different in the legal sense. Homesteading is a way for you to protect your investment in your home.

Homestead laws were designed primarily to protect home owners from losing homes to creditors. In the early days of our country, this protection was felt to be the right of a property owner and to contribute to the stability of the family unit. At the present time, every state has some sort of homestead law. These laws vary greatly from state to state, but with few exceptions, they all protect the home from creditors' claims up to a certain amount of equity.

In California, you can record a homestead declaration, which may prevent your home from being attached and sold to pay certain types of debts or judgments entered against you in a lawsuit. A large portion of your home equity can be protected to a value of up to a certain amount set by law in excess of the amount owed on the property.

All you have to do to take advantage of this legal protection for your home is to record a document called "A Declaration of Homestead". You do this by recording the document at the county recorder's office. The declaration tells who owns the property, who lives there, where the property is located (including the legal description), and what type of property is being homesteaded (that is, a single family house, a mobile home, or in the case of condominium owners for instance, part of a larger building.) The declaration must also state if any other homesteads have ever been declared by you, because you may have only one homestead at a time.

A homestead can be declared only on your place of residence, and if you own several different houses--rental property, for instance, or if you're lucky enough to have a weekend cabin in the mountains, you can still only homestead one of these homes. And if you are married, you and your spouse can't each declare one of your residences as a homestead. The rule is only one homestead to a family.

Any head of household and any husband or wife may declare a homestead on the property where he or she lives. It's an easy and simple way to protect yourself from creditors who might otherwise be able to put in a claim or attachment for debt against all or most of your home equity. You should be aware, however, that a homestead may not prevent creditors from selling your home, if the equity in your home is greater than the amount allowed you by the homestead law. That extra amount is not protected by your declaration of homestead. Your creditors can attach that excess equity, and in some cases, can obtain a court ordered sale of your home to pay your debts.

You can consult your lawyer to find out more information about protecting your home. A home is usually the greatest investment -- the most valuable possession -- that most of us have. And while most of us feel the chances are good that nothing is going to happen to endanger that home or take it away from us, problems do arise, and many of us face financial difficulties from time to time. Since the homesteading process is simple and easy, it's worth looking into in order to give you security and peace of mind about your own home and your family's welfare.

As of 2006, the homestead exemption limit is $50,000 in California for a single person, $75,000 for a couple, $150,000 if 65 or older, or physically or mentally disabled, $150,000 if 55 or older, and are single and earn under $15,000, or are married and earn under $20,000. More details may be found in California code of civil procedure section 704.730.

The assistance of an attorney is not required to homestead your home in California. You may purchase a blank form at many office supply stores, and fill out the form yourself, using the legal description of your home which is on the deed to your property. The California Department of Consumer Affairs has the form available at its website,

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