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Property Protection in Bankruptcy

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  • 09-14-2014, 09:51 PM
    bbcdon
    Property Protection in Bankruptcy
    My question involves bankruptcy in the state of: California
    My wife & I just filed Chapter 7 BK. My wife owns 50% in a residential rental. It was in a revocable trust which ended in 2007 due to the death of her mother. The deed was never transferred to her & her sister. It is still in the name of her mothers estate. Can the creditors touch her equity? Our attorney seems to think that they can, but he is not for sure. Anyone out there know the answer to this situation?
  • 09-14-2014, 10:57 PM
    adjusterjack
    Re: Property Protection
    Strangers on the internet are supposed to teach your lawyer his job?

    OK.

    The answer is yes, she and her sister own the property by law even if it's still in the name of the trust.

    It's not the primary residence so it's not protected by any exemptions.

    You even refer to "her equity" which means that it's partly her asset that has value to her.

    She would have to reveal her interest on her property and income/expense schedules and she could be compelled by the bankruptcy trustee to liquidate her interest and put the money into the bankruptcy estate for distribution to creditors.

    Or if she wanted to retain her interest in the property she would have to come up with a cash equivalent to pay down debts before you and she could discharge the remaining debts.
  • 09-15-2014, 12:32 PM
    bbcdon
    Re: Property Protection
    Thank you for the info.
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