Jointly owned property and Chapter 7

[brighterday]

Hi,

I have been reading the boards for a while now trying to do as much research as possible, but haven't found an answer to my specific situation.

I am considering filing personal Chapter 7 due to overwhelming small business debts that were personally guaranteed by me and the slowdown in the economy that has killed sales. The problem I have is that a few years ago, my mom and I jointly purchased a condo (where I currently live...she lives in another state), so both our names are on the deed and public records info. However, only her name is on the mortgage loan for the condo and she pays the monthly mortgage payment.

I don't have exact figures, but I expect that the equity in the condo is no more than 20-30K, if even that.

My question is this: Will the condo be seen as my personal asset and will they try to go after it even though it is "jointly owned?"...ie will they try to force a sale (good luck in this economy) in order to get money to pay my creditors? It is my primary residence, but not my mom's--again we are both listed on the deed.

The way I see it, with the federal homestead exemption being around 20K, and me not owning any other property (no cars, luxury items, etc), even if there is 20-30K in equity, this number should be split in half since the property is jointly owned (and it's just me filing BK), which means 10-15K, and so the condo should be safe. However, I don't know if this is true to life or wishful thinking.

I don't want my mom to lose her investment and I don't want to be out on the streets with no place to live.

Any help is greatly appreciated!

[lalap123]

Well...

It depends on whether not you can claim the federal exemption...I know in GA you can only use the state's and it is only $10K. I am in the same boat...DH and I are on deed but he is only one on the mortgage.

I've talked to two different atty's and they seemed to view this differently. Since I've probably got around $40K in equity one seemed very pessimistic and pretty much told me that even if I got an appraisal that showed significantly lower than my tax assessed value that the trustee might come after the house and try to sell it for the highest value possible, even if it took 6 months. However, the other atty I spoke with (who has over 20 years of experience) didn't seem to think there would be a big issue and basically said that any equity would be split equally (theoretically), so my DH would be eligible for a large sum, I would be eligible for the $10K, and that any trustee could calculate the amount in realtor and other fees that would be taken off the top as well. It still makes me nervous but of course I prefer the atty who seems to want to fight for me to keep the house. He also said that if they determine that they want X amount of the equity that usually you can negotiate with them and that they would let you pay it to them over several months or even a year.

Hope this helps.

[AngelinaCatHub]

Bright:

Here is how I view this. First, when do you wish to file? If you can, hold out to 90 days, then give Mom a quit claim deed to your half.

Next who is on this mortgage? Mom, right? You are not. So actually, you are living on her resources, so it should not penalize your means test.

In actuality, your Mom is kind enough to help you in your living space. This can help or harm you on your bk. You do not pay rent (I assume) and are part owner. This is something that a lawyer should handle, but in my opinion, quit claim deed to her and take advice from a lawyer.

You are more fortunate than many. I praise your Mom as this is what I would do under any circumstances. GBWY ‘Hub

[brighterday]

Thanks lala and Hub for your responses.

Lala, I can claim the federal exemption but the equity in the house may be more than what I can exempt.

Hub, I thought that doing a quit claim deed within 2 years before bankruptcy could be looked at as hiding or transferring assets, so this is why it seems like that's not an option for me. If it is though, it seems like it would solve all my problems.

[browneyes]

I wouldn't do a quitclaim. I am in the same boat with some property owned by me and my siblings. The lookback period is two years from what one experienced attorney told me.

I know, not what you wanted to hear, sorry!