Home Equity
Question: How can we legitimately and legally shelter the equity in our home upon its sale, just prior to bankruptcy proceedings? I am thinking we may realize 12-18,000 in equity that will be split between two separating spouses. Any advice?
Answer: The rules are different depending on what province or state you live in, but in general you cannot shelter the proceeds from the sale of your house if you file for bankruptcy. (You can review our list of what you get to keep if you file for bankruptcy to confirm the rules in your province).
When you go bankrupt you are required to disclose all real estate sales within the preceding five years. If you don’t disclose the sale, your bankruptcy could be extended and you could face criminal charges, since the bankruptcy documents are your sworn statement.
We suggest you consult your lawyer for further advice before filing for bankruptcy.