What happens to jointly held property in a bankruptcy?
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What happens to jointly held property in a bankruptcy?
My aunt and I purchased a manufactured home 4-1/2 years ago. She has had to have both knees replaced and is now on long term disability. She can’t afford to pay her bills and she is considering filing Chapter 7 Bankruptcy. Will this affect my credit? Will we have to sell the home? If I choose to refinance it in the future to get it in my name only, will I be able to do that?
Asked on October 29, 2010 under Bankruptcy Law, Michigan
Answers:
M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
Every state has what is known as a homestead exemption. That is the amount that you are permitted to hold as exempt in your bankruptcy. The rules vary widely from state to state. Additionally, some states permit you to choose between the state exemptions and the Federal exemptions. Sometimes one can be more advantageous than the other depending on the circumstances. Michigan's law as to homestead that would apply here to your aunt is as a single person and would be up to $34,450 (up to $51,650 for a disabled single person). There is also a requirement about the size of the lot, etc. As to how it will effect you depends on the value of the property, if she wants to instead re-affirm the mortgage and then keep paying once the other bills are wiped out (again, if the law allows it). etc. I would have her speak with an attorney in your area to decide the best alternative here. Maybe modification? Good luck.
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