If I co-own my home with a family member, will my bankruptcy effect my co-owner’s credit or co-ownership of the property?

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If I co-own my home with a family member, will my bankruptcy effect my co-owner’s credit or co-ownership of the property?

I recently went on Social Security Disability, which is my only income. I have substantial credit debt, about $ 20,000. My co-owner has perfect credit, owns his home, 2 cars and has no debt. We own a $ 300,000 home with very little equity, around $30,000. Will it effect my ownership? Is it possible to transfer the entire property to my co-owner prior to bankruptcy, or is it breaking any laws to do so? Prior to my unemployment I had good credit as well.

Asked on October 10, 2012 under Bankruptcy Law, Maryland

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Under federal bankruptcy laws as well as laws with respect to the states in this country with respect to debt issues, your credit issues will have no effect upon your co-owner's credit concerning the real property you both own so long as the debt load on it is serviced timely.

I would not unilaterally transfer your interest in the property you are writing about to the co-owner before the bankruptcy filing for no consideration. If you wish to sell the interest, then a formal escrow with purchase contract and disclosures can be done before any bankruptcy filing so that the sale is deemed an arms length transaction under the law.


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