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  1. #1

    Default Will the Trustee Pursue People Who Owe Me to Help Pay my Creditors

    I have a written contract with a friend whereby we agreed to invest in a property and split all gains or losses 50/50. My friend put up most of the downpayment. In return for that I put everything (deed, Mortgage) in my name. The rent does not cover expenses. We were splitting cost (after rent) 50/50. Now he can't pay his half at all and I can't cover for him. The situation may force me into Foreclosure and then bankruptcy.

    I do not want to take legal action against my friend. If I don't, but I end up in BK will the Trustee pursue him to try and recover some of the debt owed to creditors?

  2. #2
    Join Date
    Mar 2005
    Location
    Michigan
    Posts
    28,906

    Default Re: Will the Trustee Pursue People Who Owe Me to Help Pay my Creditors

    Are you speaking about the property itself, which is exclusively in your name? Or about the losses from the rental of the property? Or both?

    Do you have a written contract with your friend?

  3. #3

    Default Re: Will the Trustee Pursue People Who Owe Me to Help Pay my Creditors

    Aarron - to be more specific - the rent doesn't cover the expenses (mostly mortgage) on the property. Our contract says we split everything 50/50. He can't afford to pay his half of the monthly loss (after rent) any longer, and I can not afford to cover his half, so I will end up in default. The property will get foreclosed and I'll have a hefty deficiency judgement against me. I may have to go into BK because of the deficiency judgement.

    The creditors are going to loose $$ whether i go Chp 7 or 13. So then, would the trustee pursue litigation against my partner to offset the loss to the creditors?

  4. #4
    Join Date
    Mar 2005
    Location
    Michigan
    Posts
    28,906

    Default Re: Will the Trustee Pursue People Who Owe Me to Help Pay my Creditors

    Are you asking about debt on the property, just the operating expenses, or both?

    Do you have a written contract with your friend?

  5. #5

    Default Re: Will the Trustee Pursue People Who Owe Me to Help Pay my Creditors

    Debt on the property only (specifacally the deficiency judgment). Once its auctioned it will sell for 50% of the mortgage outstanding. The creditor is only going to get a fraction of the deficiency back from me in a chp 7 or 13 whichever I end up. Will the trustee go after my friend for his half of the Deficiency?

    Yes - I have a written contract with my friend which says we split any profit or loss and any expenses while holding the property 50/50 but the deed and mortgage are in my name. I agreed to that b/c he put down more money than me initially.

  6. #6
    Join Date
    Sep 2005
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    Behind a Desk
    Posts
    98,846

    Default Re: Will the Trustee Pursue People Who Owe Me to Help Pay my Creditors

    If you want to know what the trustee will do, you have to ask the trustee. The rest of us can just guess, and getting facts out of you is a bit like pulling teeth.

    If you and your friend don't say anything, how would anybody know about your deal? As the property and debt are exclusively in your name, your side contract aside, absent some action by you or your friend the trustee is going to regard the debt as yours.

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