He could not stand the pressure of the monthly note payments so he visited us for advice. We determined that he could not file chapter 7 bankruptcy because his house was worth too much. It appraised at $485,000 and he had paid down his mortgage to $63,000. That left $422,000 in equity. His wife owned half the house, so his share was worth $211,000, but he was entitled to a homestead exemption of only $165,000. That left $46,000 of equity that could not be protected. If we filed a chapter 7 case, the bankruptcy trustee would ask him to pay a lump-sum of $46,000, and if he could not pay it, the Trustee would sell the house.
His loan had matured last year and the bank presented him with a six-month extension, while they evaluated a new loan. He couldn't decide what to do.