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Co-Owned Home and Chapter 7 Bankruptcy

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  • 04-21-2009, 10:20 AM
    indebtforever
    Co-Owned Home and Chapter 7 Bankruptcy
    My question involves bankruptcy in the state of: California

    My girlfriend and I purchased a home together with both of us on the note. I am considering discharging about 10 years of business and personal debt to the tune of 70k in Chapter 7.

    Since the housing decline, our value of the home has depreciated about 150k which eliminated any equity we had. My understanding is that since this is my only home (homestead exemption) and the fact we have $0 equity in this house, it would be exempt from a forced sale at the time of filing.

    1. Is this true?
    2. What are (if any) ramifications to my girlfriend if I file chapter 7 and there is less then $150k in equity in the home?
    3. Can I quick claim the house to her to protect the house or is this considered a no-no? She already owns 50% on paper.
    4. Should I quick claim the property and wait 2 years before filiing and just ignore the creditors?

    Thanks for any help.
  • 04-23-2009, 06:04 AM
    Mr. Knowitall
    Re: Co-Owned Home and Chapter 7 Bankruptcy
    You don't want to quitclaim the house to her to keep it out of the hands of creditors. If deemed a fraudulent conveyance, that could cost both of you your exemptions.

    If you have no equity in the home, there's nothing there for creditors to pursue.

    If you can comfortably wait two years to declare bankruptcy, you need to consider whether in fact you need bankruptcy protection.

    You should be able to get a free consultation with a bankruptcy lawyer; I suggest consulting one.
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