PROTECTING YOUR PROPERTY
If you have property that legally can be seized by a creditor, you may want to think about “exemption planning.” This is a way of maximizing the protection of existing laws by converting property that can be seized (for example, cash) into property that cannot be seized (for example, household goods or equity in your home).
All states provide some protection for your personal property. Most states also protect a debtor’s home to some degree. Furthermore, in most states, debtors who are married and who own a home can protect the home simply by making sure that the property is held in tenancy by the entirety, which assures that one spouse cannot lost their home if the other spouse has debts that cannot be paid.
If you are 62 years or older you can fully protect your home from unsecured creditors with a federally approved Reverse Mortgage, which allows you to receive a line of credit equal to a percentage of the equity in your home. The reverse mortgage company’s lien and the FHA lien covers 150% of the fair market value of your home. This will protect your home from judgment creditors. You make no mortgage payments during your lifetime and your line of credit is exempt from garnishment by judgment creditors.