If a family member loaned me the money for my mortgage but they are now filing bankruptcy, how can this affect me?

UPDATED: Sep 30, 2022

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

UPDATED: Sep 30, 2022Fact Checked

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

If a family member loaned me the money for my mortgage but they are now filing bankruptcy, how can this affect me?

I’m a young adult with little credit history and didn’t want to be eaten alive in interest, However, they are now having to file bankruptcy. I know there’s a trustee in the mortgage. Does the agreement transfer to them? The friend is saying that I have to sell my house immediately but I don’t see why.

Asked on June 20, 2017 under Bankruptcy Law, Maryland


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

No, it doesn't affect you if you are the one who was loaned the money but the person who loaned you is filing bankruptcy. Their bankruptcy affects their *creditors*--the people or businesses to whom they owe money. But it has no direct effect on anyone to whom they owe money. The only indirect effect it *may* have is that if the loan agreement enabled them to call for repayment early, then the bankruptcy trustee, whose job it is to find as much money as possible to repay creditors could potentially exercise that option. But that is ONLY if the terms of the loan specifically allowed the lender (the family member) to demand early payment. If it did, the trustee could make you repay early...but otherwise, this has no effect.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption