Please help, will she lose her house?

[brianj]

My GF is about to file for a chapter 7. She has a mortgage which she currently owes $36,500.00 on. The house was appraised for around 80,000.00. The Michigan exemption for homestead is $34,450.00. She also borrowed about $40,000 from her mom to purchase the home. She has no other assets at all and has about $35,000 in unsecured debt on 3 credit cards.

[Mi Bankruptcy]

When did she borrow the money?
What is her current income?
is she behind on her mortgage?

[brianj]

When did she borrow the money?
What is her current income?
is she behind on her mortgage?

She purchased the home from her Mother in 2002. She mortgaged about 42,000. and received loan for mom for the rest. She is currently unemployed receives $400 for child support a month. The mortgage is not behind.

[SMinGA]

If you gave an accurate appraisal value, I think it could go either way. She has about $10,000 in non-exempt equity which the trustee might want. But the cost of listing and selling the house would take at least 1/2 if not all of that. So it might not be enough equity for the trustee to trouble with. Even though she owes her mom, it does not sound like there is any kind of official lien on the home for that part of the debt.

The downside to filing bankruptcy right now is she is unemployed, so may still incur new bills that she can't pay. Such as if she gets hurt/sick, can't handle utility bills, etc. If its possible to wait until there is some improvement in her cash flow, perhaps that would be best as building up new debt after filing would make it hard to get a 'fresh start'.

[brianj]

Wanted to add that the 40,000 borrowed from her mom she signed a promissory note for. Will this make a difference? Will this help in meeting her exemption?

[Mensa1]

Wanted to add that the 40,000 borrowed from her mom she signed a promissory note for. Will this make a difference? Will this help in meeting her exemption?

NO, won't help with exemption unless they also recorded a mtg against the property to conicide with the note. Otherwise it is an unsecured note no diff than a credit card balance or any other unsecured amount owed.

She might record a mtg now, before filing, and it may fly since the TT may not check the recording of the doc, or ask. Of course if the TT did investigate (unlikely) they could alway disallow the secured aspect and treat it as unsecured debt. Very little to lose here by recording a mtg now, IMO.