Can I stop a foreclosure by filing bankruptcy even if I have $100,000 in a trust that my husband left me?

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Can I stop a foreclosure by filing bankruptcy even if I have $100,000 in a trust that my husband left me?

My husband passed away last year and left me $100,000 on life insurance. I have not used that money yet. My house is set for foreclosure in three days and I want to stop it by filing bankruptcy. Is it possible to file bankruptcy to stop a foreclosure even if I have the $100,000 in a trust right now?

Asked on August 7, 2012 under Bankruptcy Law, Florida

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

You can try to file a bankruptcy but if you have that much in liquid assets it could be considered a fraud on the court if you are filing for Chapter 7 bankruptcy.  Before you do anything, consider talking to your lender about halting the foreclosure while you apply for a modification of some sort or something under HAFA (alternatives likes short sales).  This way, you can get rid of the home and still have your $100,000.00.  Talk to a bankruptcy attorney if you are concerned about the next steps.


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