A homestead declaration form is used to protect a person's home equity by providing that person with an exemption from standard liability so that part of the home's equity cannot be taken by creditors or in the bankruptcy process, according to Cornell University Law School. It is a part of the law that exists in all 50 states, but may vary slightly from state to state.Continue Reading
The standard rule is that $20,000 of the home's equity will be protected even if the home is sold to pay off incurred debts by a creditor or a bankruptcy trustee. However, some states have laws that require the residence to be under a particular square footage for the exemption to hold. Yet other states will allow a person to place their entire residence under exemption therefore it is best for any person who is interested in obtaining a homestead exemption to speak with their local law library or personal legal council for exact rules and regulations. Most homestead declaration forms can be accessed for free from the state's public law library.
An example of the rules and regulations that accompany a homestead exemption can be seen with the Clark County legal department in Nevada. In the state of Nevada, the homestead exemption will protect up to $550,000 of the home from all creditor claims including bankruptcy, charge card debts, accidents, unpaid medical bills and business or personal loans. However, this homestead exemption will not protect the person or the home from any debts that are "secured by a mortgage or deed of trust" as well as taxes or child support payments.Learn more about Real Estate