FARM: Protect your equity with a declaration of homestead!

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If you are experiencing financial difficulty and worried you may be in danger of losing your home to creditors other than your mortgage lender, a well-informed real estate agent can guide you through the process of protecting the title and investment in your most cherished asset — your home.

Recording a declaration of homestead on your title will ensure your hard-earned home equity is protected from creditors. Individuals with no dependents are eligible for $75,000 worth of protection, a head of household with at least one dependent is eligible for $100,000 and any homeowner who is aged or disabled may qualify for a $175,000 exemption from the demands of creditors who do not yet have a lien on your home.

In order to qualify for a declaration of homestead:

• your home must be occupied as your principal residence at the time a judgment is recorded against you; and
• you or your spouse must continually reside in the home until the court determines your home is a homestead.

Creditors may not force the sale of your home to collect a debt if the equity you possess in your home is less than the homestead exemption you qualify for, thus entirely saving you from the turmoil of a forced sale of your home.

However, if your equity exceeds the amount of your exemption, a creditor may be able to force the sale of your home — but the dollar amount of your equity will be protected in the amount of your homestead exemption. You then have six months to reinvest your homestead amount in another residence.

In these difficult financial times, take the offensive against creditors who sue you and be sure title to your greatest investment is protected. Record your declaration of homestead before a creditor obtains a judgment against you.

Contact your real estate sales agent today to obtain a copy of a declaration of homestead form, published by first tuesday, and learn how to get it recorded!