My name is on my mother's house now what?

[oldtimer]

Filing chapter 7, just remembered my name and 3 others are on my mother's house? How does it work....worth $145 and $48+ owed. Do I get 1/4 the exempt or what, does any one know how this one plays out?

[JRScott]

In general you can't get the Homestead exemption unless you live at the Home. This is something you need to bring to your lawyer's attention immediately so he can advise you. I'm thinking this could be a small problem. If its worth 145k and 48+k is owed with 4 owners that means you technically own 24250 equity in the home. Another thing and this will be harder you need to tell the other 3 owners about your bankruptcy. It is possible even if you have equity in the home that the home is worth less than you think. Having no idea of what the closing costs, etc are in your state there is a possibility that the Trustee could abandon his claim on it. Whatever you do do not have your name removed from the deed without consulting your attorney.

[oldtimer]

No problem telling the others, they are siblings and they know....but my yrs old mother with Alzheimer's can't be put out and my one sister lives there and pays all the bills. The property is in Colorado. I grew up in the house. Thanks for the info, I'm seeing an attorney but just wondered if anyone had a similar experience?

[chriselle]

i think you can cover that with the homestead exemption.

[NewLifeAhead]

Oldtimer,

I was in the same boat as you. I'm 1/3 owner of my parents house and I filed Chapter 7. My parents also have an equity line on the house. Between the value of the house, the amount on the equity line and the costs of selling the house (Realtor fees, lawyer fees, etc), my lawyer knew that the trustee would abandon the property. My lawyer advised me not to exempt my 1/3 equity in the house as not to waist part of my exemption amount on something he knew the trustee would abandon.

It took a lot to trust the lawyer as this was my parents house, but he said the worst case is that you would negotiate to buy back that equity with the trustee so the house would not be sold.

The bank where my parents have the equity loan were made of aware of my filing but didn't bother my parents as I'm not on the loan. The equity loan and bank have to be listed on your chp 7 filing so the value of that equity line can be deducted from the value of the house. My siblings wouldn't have found out either (if I didn't tell them) even though they own the other 2/3 of the house because it wasn't sold.

At my 341 meeting, the Trustee didn't question the property and he abandoned all property soon thereafter. My equity was less than your potential 24k but your house maybe worth less than the 145k as others have said and you also would need to subtract all selling costs. Your lawyer will be able to advise you of what to do as they should know the trustee(s).

Good Luck to you.

[oldtimer]

Thanks you guys for the imput. I am just scared that I will not be able to file, it's complicated, the house is paid for and my one sister has the 49k loan against it. I think there is too much equity in it and they would go after it.....but, I am seeing a lawyer today, just hope they know how this would play out. Thanks again.

[btbeme]

Oldtimer, here is my experience...

I live in AZ, my siblings in other states. My mother (disabled) lives in a home in another state. That house is in my name and three siblings' names; the mortgage is in my name. My siblings all contribute to mom's support by helping pay the mortgage. She lives there full time.

There was a long history of the property being in her name. We siblings built her the house when she was disabled five years ago. She wasn't able to finance it in her name so we did it for her. The property value is about the same as the mortgage value, maybe slightly higher - it was difficult to pin down, but we did the best we could using local comps on Zillow, etc.

The Trustee had no questions about this at all, which was a HUGE surprise for me. My attorney was confident that the rationale for having the home and mortgage in our names was sound; failing that argument, it could be that the property simply didn't have enough equity to warrant attempting to sell it out from three other siblings and a disabled grandmother, and all the red tape that would entail trying to do so in another state.

Whatever the explanation, I feel the same way about this as I do about most things having to do with a BK - if you are not trying to hide anything, have a good reason for doing what you did, have a reasonable track record to support your choice, and are up front with all of it, the Trustee is less likely to question it.

Do you have an attorney? I would make sure that the filing has a good explanation that you can back up 100%. In my opinion, which is worth absolutely nothing in the real world, I would say that you are probably OK.

[oldtimer]

OK everybody, here it is. Attorney would not take the chapter 7 or 13 it would put my mom's home up for sale no question! In the state of Washington the trustees always go for the asset no matter what the circumstances. They would sell it for whatever they could get pay off my other siblings and distribute the rest to the creditors, after they took their cut of course.
She said the fact I am on SS the credit card companies have nothing to take. I can't claim the exemption on the house because I have to live there for that. If the creditors want to put a lien on the house, so be it, they can have their money out of my 1/4 when we sell it. She said then we would be selling when we wanted not by the court and for far less than we will get. So looks like I move on and just let the creditors write me off. They get more that way then a lien that may or mayn't ever get paid. So thanks for all your input, hope this helps someone else. And in Washington state don't think they will look the other way, even if you are honest and don't hide anything, if you have equity in a home they will go after it!