How to Write an Objection to Equity Deemed Non-Exempt in Real Property

by Owen Pearson

If you file for Chapter 7 bankruptcy protection, you will be required to list all assets you own, including equity you hold in real estate property. If the amount of equity you hold exceeds the exemption threshold under state or federal law, the bankruptcy trustee may sell the real estate to pay your creditors. If you believe that the equity in your real estate property is exempt, you may write a letter objecting to the trustee's determination that the equity is non-exempt.

1. Identify the property that the bankruptcy trustee claims is non-exempt by listing the address of the real estate property.

2. List the market value of the real estate property. Your attorney can help you determine the value; however, an appraisal can give more credibility to the market value.

3. List the remaining loan balance of the mortgage of the real estate property.

4. State the exemption amount provided by federal or state law for real estate property. Depending on the state in which you live, you may have to use either the state or federal exemption, or you may have the option of choosing between the two.

5. List any wildcard exemption amount provided by state or federal law. In order to apply the wildcard exemption to your real estate equity, you must not apply this exemption to any other assets for the purpose of preventing bankruptcy liquidation.

6. Show the calculations that demonstrate that the real estate exemption, plus any applicable wildcard exemption, exceeds the amount of equity in your property.


  • Have your attorney assist in composing the objection letter if you are not comfortable composing the letter yourself. Because the objection letter will become part of your bankruptcy paperwork, you will want to make sure that all information in the letter is accurate and supports your objection.


  • Remember that even if the trustee determines your real estate property is exempt, discharge of real estate debt in a Chapter 7 bankruptcy does not disturb the lender's lien on the property. If you do not continue making payments to your mortgage lender, the lender may foreclose on the property.


Photo Credits

  • Brand X Pictures/Brand X Pictures/Getty Images