What happens when a co-owner of a house files for bankruptcy?
Question Details:
I would like to file for bankruptcy, however, my mother owns a house that currently also lists me as an owner; I am on the mortgage because I use to work in the banking industry and was able to get her a low rate if I included myself on the mortgage as a secondary. I do not own this house, though my name is on all the paperwork. If Iwould file for bankruptcy, what would happen?
If you are on title to the home, you must list it as an asset in your bankruptcy. If you are only on the loans, then you would only list the debts. How this would affect the property depends on which chapter of bankruptcy you file, and how much equity there is in the property, as well as what value in other assets you have and what exemptions you have available under applicable state law.
In a Chapter 7 case, if you are not living in the house, you would not be able to protect very much equity and it is possible the home could be sold by the Trustee. In a Chapter 13, you'd have to provide for payment to your creditors of at least as much as they would get in a Chapter 7 case. It's hard to be more specific without all the facts.
Mark J. Markus, Attorney at Law
Handling exclusively bankruptcy law cases in California since 1991.
http://www.bklaw.com/
Follow Me on Twitter: @bklawr
