QUESTION
Can the bankruptcy go after the assets of the sister who is not in bankruptcy to pay for the sister's debts who is in bankruptcy?
Asked on Dec 10th, 2012 on Bankruptcy - North Carolina
More details to this question:
Two sisters own a home free and clear but have a home equity on it.
11 ANSWERS
Business Litigation Attorney serving Orange, CA
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Law Offices of Frank Granato
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It depends on the circumstances.
Answered on Apr 30th, 2013 at 10:04 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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I would need to review the various dye commence regarding the home equity loan and its terms before I could form an opinion. I would suggest that you see a lawyer.
Answered on Apr 29th, 2013 at 4:37 AM
First, to clarify a few things. If you have a home equity loan on the home, you are not "free and clear" on the home. Second, if the home is owned by both of you, it is not just your asset. So, to answer your question, depending on how much equity is in the home (1/2 is your sisters) the trustee may go after the home.
Answered on Dec 13th, 2012 at 2:21 PM
Bankruptcy Attorney serving Phoenix, AZ
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Law Office of D. L. Drain, P.A.
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It depends on the circumstances, the value of the property, the debts on the property and the exemptions in that state. Please understand that filing for bankruptcy is a very complicated process. It is wise to talk to an experienced bankruptcy attorney before deciding to take this important step.
Answered on Dec 13th, 2012 at 2:20 PM
Deborah F. Bowinski
In a chapter 7 case, what happens to the home is entirely dependent upon the value of the home, the age of the sisters, and the balance on the equity loan. The bankruptcy trustee may well be able to sell the property and give the non-filing sister her value while keeping a portion of the proceeds to he used to pay the creditors of the sister who files bankruptcy. Or, the trustee may try to sell the debtor's half of the home to the other sister. Or, if the numbers are not right, the trustee might do nothing. A chapter 13 case works very differently and might allow for keeping the property in exchange for paying the value that the trustee might realize from a sale over a longer period of time. Whether that is a realistic option is something to discuss with a local bankruptcy lawyer. This situation is only one example of why it can be very foolhardy to file a bankruptcy case without the assistance of an experienced attorney.
Answered on Dec 12th, 2012 at 1:50 PM
It is hard to understand your question the way it is worded. I can tell you that, in Florida, the protection for your home is very strong. In addition, the bankruptcy trustee is only supposed to administer the assets of the bankruptcy debtor.
Answered on Dec 12th, 2012 at 12:23 PM
Bankruptcy Law Business Attorney serving Asheville, NC
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Pitts, Hay & Hugenschmidt, PA
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No. If the debts are not consigned the sister's assets are not involved.
Answered on Dec 12th, 2012 at 12:23 PM
Chapter 13 Bankruptcy Attorney serving Bloomington, MN
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Gregory J. Wald
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There is not enough information in this question to give a firm answer. If their is a home equity loan against the property, then they don't own it free and clear. However, generally speaking, the non-bankruptcy sister's interest in the home cannot be seized by the bankruptcy trustee. In Minnesota, the person who files bankruptcy can protect the equity in their homestead up to $390,000 in the bankruptcy.
Answered on Dec 12th, 2012 at 12:23 PM
Criminal Defense Attorney serving Deltona, FL
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R. Jason de Groot, P.A.
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Generally no. This should not happen.
Answered on Dec 12th, 2012 at 12:22 PM
Bankruptcy Law Attorney serving Livingston, NJ
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Law Office of Stuart M. Nachbar, P.C.
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In NJ: Yes a Trustee can partition the Property.
Answered on Dec 12th, 2012 at 12:22 PM
Chapter 13 Bankruptcy Attorney serving Winston-Salem, NC
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Love and Dillenbeck Law
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I assume you are asking if the trustee can go after this property. When a person files a Chapter 7 bankruptcy, they must be able to exempt/protect property they own to keep it safe from the bankruptcy trustee selling to it pay creditors. If a property is exempt the debtor keeps it. If the property is not exempt, the trustee will take and sell it. The question was short so I will make a few assumptions to give an answer. In your case, two sisters own a home together. At first you say they own it free and clear but have "a home equity" on it. I will assume that is an equity line of credit, meaning the home is not currently free an clear. In North Carolina, the debtor filing owns half of the home and may exempt their half of the equity (value of the home minus the loan) up to $35,000.00. If the debtor's half of the equity is more than $35,000.00 the trustee can force a sale of the home. He would pay off the loan, then give the non filing sister her half of the money, pay the filing sister up to $35,000 and then use the rest for costs and to pay off the creditors.
Answered on Dec 12th, 2012 at 12:21 PM