Financial Tips | Debt Management

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7/23/07

Financial Hardship and Homestead Laws

Many of us have faced times of financial hardship. In the current economy, real estate prices are in the toilet. If you bought real estate at the end of the most recent boom, you probably have negative equity in your investment properties. Additionally, you made a common investment mistake by buying when the market was hot, however, that is a talk for another day.

Many people are unaware of homestead laws. Homestead laws protect your primary residence from a forced sale due to outstanding debt, property taxes, judgment liens, etc. In fact, here in Nevada, a recent Court decision stated that judgment liens are void against fully exempt homestead property. It is the most inexpensive way to protect a large chunk, if not your entire home.

Homestead laws protect a certain value (be it equity) in your home. If your home is worth more or you have more equity in your home than the law protects, your home could still be “forcefully sold,” however, you would get the proceeds from the protected amount.

Homesteading a property is easy and cheap (usually the cost to record a document at your county recorders office). Check out your local laws and county recorder or assessor’s office and see if a homestead is right for you. It is the best, most inexpensive way to protect you home.


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