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  1. #1
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    Nov 2005
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    Florida
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    Default Effect on Inheritance of Mortgages and Bankruptcy

    Pennsylvania

    I filed and was approved for a Bankruptcy Chapter 13 last april. I am on a payment plan for 5 years then it gets dismissed/finalized.

    My question is, I left my home and everything I own to my parents in my will. My home still has a mortgage on it. If I were to die, would my parents get my home, and just have to pay off the mortgage, or take over the mortgage? Or how does the bankruptcy play into this?

    Would the house be lost because of the bankruptcy?

    Only reason I am concerned is that my parents have been helping me pay for the mortgage and I don't want them to lose anything if I were to die.

    Please advise.

  2. #2
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    Sep 2005
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    Default Re: Effect on Inheritance of Mortgages and Bankruptcy

    Your parents would inherit the home subject to the mortgage. They could, for example, refinance, pay off the mortgage and keep the house, or sell the house and pay off the mortgage with the proceeds.

  3. #3
    Join Date
    Nov 2005
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    Florida
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    69

    Default Re: Effect on Inheritance of Mortgages and Bankruptcy

    MR Knowitall, Thanks!

    What happens to the bankruptcy and all the debt that was on the bankruptcy?

    Would my parents be responsibile to pay this, or is my house seized to pay the original debts?

    Or, if I died, does the debt/bankruptcy go away, and my parents can just take over the mortgage/home with no issues with my original debt. (which is alot)

    Thanks.

  4. #4
    Join Date
    Jan 2006
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    38,867

    Default Re: Effect on Inheritance of Mortgages and Bankruptcy

    your estate (including any equity you have in the house) will be used to pay any outstanding debts. If there is anything left, it will be distributed per your will. If your estate is great enough that the debts can be paid without the liquidation of the house, then your parents could forseeably end up with the house. If the estate can pay off all of the debts except the mortgage, then your parents would likely recieve the house subject to the mortgage with the options Mr K explained.

    If your estate is not great enough to pay your debts without liquidating the house, then your parents will simply lose out.

  5. #5
    Join Date
    Nov 2005
    Location
    Florida
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    69

    Default Re: Effect on Inheritance of Mortgages and Bankruptcy

    IS there anything I can do to prevent this from happening? OR protect the interest in the house for my Parents?

    Wouldn't they just be responsible for the amount left on the Payment plan of the Bankruptcy?

    I need advice/help. My parents are helping me pay for the mortgage cause I am in financial difficulty but I want them to have the house if something were to happen to me.

    I don't own anything of real value. It was determined that I have about 19,000 in equity in the home, which is the amount of the payback plan for the Chapter 13.

  6. #6
    Join Date
    Jan 2006
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    38,867

    Default Re: Effect on Inheritance of Mortgages and Bankruptcy

    sounds like break even then with the parents not getting the house.

    why would any creditor be forced to continue with a BK if the debtor dies. The purpose of chap 13 is to allow a reasonably new start so the debtor can rebuild their life. Should you pass, there would be no need to worry about that.

    as well, you obviously could not continue with the actions required per the BK. Your parents cannot simply step into your shoes and continue the BK. They are not the ones in debt and would be enriched at the detriment of your creditors.

    Sound fair?

  7. #7
    Join Date
    Nov 2005
    Location
    Florida
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    69

    Default Re: Effect on Inheritance of Mortgages and Bankruptcy

    I was about 150,000 in debt, not including my car payment and mortgage. I lost a job and got in over my head.
    I wanted to file chapter 7, but couldn't without losing my home. So I did a chapter 13, which said I had to pay back the difference in the equity in my home, which was figured to be $19,000. And they did a 5 year plan.

    What can I do to protect the home from being taken if I died? I want my parents to have it.
    Any advice?

    How soon are you able to pay off/end a payment deal with a chapter 13 to get it discharged?

  8. #8
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    Default Re: Effect on Inheritance of Mortgages and Bankruptcy

    Why are you so certain that you're going to die?

    If you want to make sure your parents can pay off the mortgage when you die, buy life insurance.

  9. #9
    Join Date
    Nov 2005
    Location
    Florida
    Posts
    69

    Default Re: Effect on Inheritance of Mortgages and Bankruptcy

    It's not the mortgage I am worried about.

    My concern is, if I died, would the creditors come after the property?
    What happens to the bankruptcy when I die? Does it just get dismissed and that is the end of it, or does the creditors have a right to come after the home and make my parents sell it?

    Is there anything I can do to protect the home from being taken?

  10. #10
    Join Date
    Mar 2005
    Location
    Michigan
    Posts
    28,906

    Default Re: Effect on Inheritance of Mortgages and Bankruptcy

    Your creditors can pursue your estate for reimbursement of the money you owe.

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