When you fill out the bankruptcy forms, you’ll be asked to provide the “current value” of your home on the date that you file for bankruptcy. Another term for current value is “fair market value,” which is the amount that a seller who isn’t pressured to make a purchase would agree to pay for the home.
You can use different ways to determine the value of your home before you file for bankruptcy. The most important thing to keep in mind, however, is that your valuation isn’t the deciding factor. The bankruptcy trustee appointed to oversee your case will also be determining the value of your home, as well. If there’s a disagreement, a bankruptcy judge will review the basis for both valuations and make a final decision.
A full appraisal will give you the most accurate value for your property. If you refinanced your home or modified your loan, you might have a recent appraisal. What is considered a recent appraisal will depend on current housing climate.
A certified or licensed real estate appraiser who inspects your property and prepares a lengthy report, containing information on your home and information on sales of comparable homes. Based on that information and any other factors the appraiser finds necessary, the appraiser will set a value and explain the valuation.
A full appraisal is the most expensive option. It isn’t needed in most routine bankruptcy cases. They are necessary, however, if you plan to try to strip the second mortgage on your property in a Chapter 13 bankruptcy.