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  1. #1

    Default How Does Bankruptcy Affect a Co-Owner of Real Estate

    My question involves bankruptcy in the state of: California
    1. To my understanding after talking to a bankruptcy lawyer, my credit would be affected should my mother decide to file ch. 13 because I am co owner, right?

    2. If she decides to file ch. 7, she can walk away from it all. The house, the car, miscellaneous bills, etc. etc. but unfortunately for me (co owner), i'll be accountable for the whole ball park figure, right?

    3. If she decides to file ch. 13, I (co signer), would be protected "automatic stay" (no collection activity) unless my mother defaults on several payments then I would definitely be liable, right?

    4. Lawyer tells her that he can't file the house under ch. 13 and that she still have to make regular monthly payments on it unless she can prove that the house is value a lot less then what it was originally worth ... right?

    5. If she files ch. 13, would it make sense for me to file bankruptcy too? separately?

  2. #2
    Join Date
    Sep 2010
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    Default Re: Second Opinion or Confirmation After Talking with Bankruptcy Lawyer

    Quote Quoting jnl
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    To my understanding after talking to a bankruptcy lawyer, my credit would be affected should my mother decide to file ch. 13 because I am co owner, right?
    Probably correct.

    Quote Quoting jnl
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    If she decides to file ch. 7, she can walk away from it all. The house, the car, miscellaneous bills, etc. etc. but unfortunately for me (co owner), I’ll be accountable for the whole ball park figure, right?
    Correct, to the extent that you are also signed on the dotted line for the loans. As to the residence, if California's anti-deficiency statute applies, then you have no liability.

    Quote Quoting jnl
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    If she decides to file ch. 13, I (co signer), would be protected "automatic stay" (no collection activity) unless my mother defaults on several payments then I would definitely be liable, right??
    Not totally correct. To the extent that the Chapter 13 Plan pays the (consumer debt) co-signed obligations in full (including the curing of any default and the maintaining of future payments on the home), the co-debtor provision of 11 USC 1301 will apply. If the obligations are not being paid in full the creditor can seek relief from the co-debtor stay and go after the co-signer as allowed by State law.

    Quote Quoting jnl
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    Lawyer tells her that he can't file the house under ch. 13 and that she still have to make regular monthly payments on it unless she can prove that the house is value a lot less then what it was originally worth ... right?
    If this is her primary residence, Chapter 13 does not allow her to modify the rights of the 1st mortgage holder and only allows her to strip off the 2nd if, and only if, there is absolutely no equity in the property after consideration of the 1st lien holder's claim. Chapter 13 allows her to "cure and maintain". Cure the arrears over the life of the Plan while maintaining going forward mortgage payments.

    Quote Quoting jnl
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    If she files ch. 13, would it make sense for me to file bankruptcy too? separately?
    Can't answer this as I do not know your financial dealings including your income, the assets you have, the type of debt you have etc. You need to sit down with an attorney to discuss if filing works for you.

    Des.

  3. #3

    Default Re: Second Opinion or Confirmation After Talking with Bankruptcy Lawyer

    despritfreya: I do appreciate the reply with your confirmation. About me other than my mother filing for bankruptcy, in my case, I don't know if it's really necessary for me to file. Because I live with my fiance, all the bills are under his name. He pays the mortgage but I contribute towards our living expenses wich adds up to $800 a month. My biggest asset would be my car note at $9,700 pay off by 2012. I think I can manage. What do you think? Is it necessary for me to file?

  4. #4
    Join Date
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    Default Re: Second Opinion or Confirmation After Talking with Bankruptcy Lawyer

    Quote Quoting jnl
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    About me other than my mother filing for bankruptcy, in my case, I don't know if it's really necessary for me to file. . . My biggest asset would be my car note at $9,700 pay off by 2012. I think I can manage. What do you think? Is it necessary for me to file?
    Sounds like you need not think about it unless the cosigned creditors come after you. It may never happen.

    Des.

  5. #5

    Default Re: Second Opinion or Confirmation After Talking with Bankruptcy Lawyer

    despretfreya: Again, I sure appreciate the reply. I feel relieved for now.

  6. #6
    Join Date
    Mar 2009
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    Key West, FL
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    Default Re: Second Opinion or Confirmation After Talking with Bankruptcy Lawyer

    First, bankruptcy is federal. The home ownership issues are state law which the federal court would follow in any decision.

    Chapter 13 does NOT allow the filer to walk away from their debts. Not a chance. It is reorganization and the bankruptee has to work out a reorganization plan with the court and pay back debts over a 3 to 5 years period. It is also supervised. While that is going on, she can't walk away from the house. Things she does before the filing can determine if she can even file or include certain things as the court will not permit any fraud. Some debts like judgments for intentional tourts are not dischargable.

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