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Home Ownership VS Lawsuits - Home loan as buffer?

Discussion in 'Banking, Finance, Investments' started by LordX, Sep 13, 2018.

  1. LordX

    LordX Law Topic Starter New Member

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    New York
    Hello - I run a business, and while I feel that my risk for a lawsuit is low - there is still risk of one.

    I was told that if I owe any money on my home (even a home equity loan payment) - that someone who is sueing me can not go after my home - since I guess a bank has an interest in it.

    Is this true? Or does this vary state by state? I am in NY, and may be in the position shortly where I will be able to pay off my home loan.

    I am wondering if I should pay it off, then immediately get a home equity loan for a few thousand.
  2. army judge

    army judge Super Moderator

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    No, it is false.

    No need to talk about those other 49 states, you live in NY state, friend.

    Good for you, buddy.

    We did that about 20 years ago.

    It is great living life debt free.

    You are the captain of your life, mate.

    You, and you alone, must decide if that works for you.
  3. zddoodah

    zddoodah Well-Known Member

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    No. Putting aside the fact that anyone can "go after" anything, any equity that you have in your home is potentially at risk. As a practical matter, creditors almost never seek to enforce an ordinary civil judgment against the judgment debtor's equity in a personal residence because there are significant limitations and procedural hoops to jump through.

    Yes. Some states (the two that spring immediately to mind are Florida and Texas) exempt all of a judgment debtor's interest in his/her personal residence from enforcement of a civil money judgment. That's why, prior to a foreclosure, OJ Simpson was able to keep his swaggy home in Florida despite having what is, by now, a high eight-figure judgment against him for killing his ex-wife and her boyfriend.

    In a state such as New York, the best way to protect your interest in your home is to carry appropriate liability insurance for your business.

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