I have an unusual situation involving two houses, a child and a deceased parent. More below...
- What is the name of your state? Georgia
So - the only remaining parent has a small home with an substantially overvalued mortgage. The mortgage is barely paid off.
The parent's child has a home too. The house deed is in the name of the child and parent. It is paid for but the child has several large debts and is unable to sell the home since collection agencies could legally seize proceeds from the sale. The child believes there is a lien on their house deed. The child's tiny home is in awful condition, btw - asbestos, broken sheetrock, you name it.
Unfortunately, the parent recently died, but not before signing bankruptcy papers. A 341 hearing was scheduled, but he passed before being able to attend. The courts have assigned a "Trustee" to decide what to do, but they have never encountered anything like this before. In the meanwhile the child is unsure what to prepare for. The child fears possibly losing both homes.
An attorney first said there is a strong possibility that (because of the overvalued mortgage) the parent's home may be written off as bad debt, and the child would actually retain both homes. As time passes on this seems increasingly unlikely, from a layperson's view.
There are two creditors in play - one owns the mortgage to the parent's home. The other has a lien on the child's home. I see no reason why the parent's creditor wouldn't reclaim the house, sell it for what they could and then write off what was left over.
The child's home is less clear. The parent's name is co-signed to the deed of the child's home. If there were no liens on the child's home I could see where they may try to repossess the child's home to sell & apply to remaining debt. Does that make sense and is that legal considering the child is co-signed on the deed?
Another thought is that both creditors may find it mutually beneficial to cooperate in the sale of the child's home, and split the proceeds.
Do trustees take into account personal hardships, such as a death? Or do they only view cases in black and white?
Can anyone help shed any light on this complex situation?

