What to do if I acquired a home as a co-signer and the owner defaulted filing bankruptcy?

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What to do if I acquired a home as a co-signer and the owner defaulted filing bankruptcy?

It was current on the monthly payments I was trying to sell it but no luck. I had a couple call me about contract for deed; I said fine. There is no lease. Verbally we agree they pick up the payments then take over the loan. The monthly payments was around $850 it was behind 2 payments but since they was putting nothing down on it they agreed to pay the back taxes and back payments they put $1500 when they first moved then paid nothing for 3 months I called them they then they made a payment to the bank or $1600. They stopped paying again and its 5 months behind and the house is now foreclose. I mailed certified mail letter giving them a 30 day notice on the 15th. of this month.

Asked on October 31, 2012 under Real Estate Law, Minnesota

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Unfortunately, you need to sort out exactly who has what relationship to you. You have a renter....but are you the titled owner of the home? If not, then you really have no enforceable agreement with the renters and the bank will have to evict those tenants. If you are merely a co-signer on the loan (the promissory note), then you need to talk with the bank about trying to a) file a motion in bankruptcy court with the bank to get a relief from the automotic stay placed on this loan as a result of the bankruptcy and b) trying to refinance in your name alone and then try to either sell, short sell or do a deed in lieu.


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