QUESTION
Can the judge or trustee order the home either sold or mortgaged to pay the debt of the one spouse when the other spouse is not liable?
Asked on Jul 29th, 2014 on Bankruptcy - Michigan
More details to this question:
One spouse files for Chapter 7 bankruptcy for a debt only that spouse owes, and both spouses own a paid-up home held in joint tenancy with right of survivorship.
7 ANSWERS
Yes. Home can be sold, and the other spouse's debts paid from HER share of the proceeds. You would receive one-half of the sale proceeds, from from anyone's claims.
Answered on Aug 05th, 2014 at 10:42 PM
While the law on this issue is not as clear as one might wish it were, my distillation of the relevant cases leads me to believe that, when only one spouse files for bankruptcy and there is jointly owned real estate, a Chapter 7 Trustee would have great difficulty obtaining a Bankruptcy Court order (under ?363(h)) authorizing a sale of a jointly owned property unless the debtor and the non-filing spouse have some joint debt. If there is no joint debt and the non-filing spouse is also residing in the premises, my view is that the Trustee's burden becomes even greater, and is probably insurmountable. The somewhat" "qualified" nature of this response is due to the fact that this area is a very tricky one involving rather high stakes. You should discuss this issue at length with competent bankruptcy counsel of your choosing.
Answered on Jul 30th, 2014 at 11:47 PM
Bankruptcy Chapter 7 Attorney serving Los Angeles, CA
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The Law Offices of Peter M. Lively
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Yes, but there are some limitations provided under Bankruptcy Code Section 363(h). You should consult with a bankruptcy attorney regarding your rights.
Answered on Jul 30th, 2014 at 11:38 PM
Yep, that is one of the risks you take by co-owning property with someone else. However, you would have the right to match any purchase price and you would be entitled to half of the sale proceeds.
Answered on Jul 30th, 2014 at 6:43 PM
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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If the debt of one spouse isn't secured by a mortgage or other lien on the property, then the creditor can't force the sale of the home once a bankruptcy has been filed. Regardless of whether you file a bankruptcy, If the debt of one spouse is secured by a mortgage or other lien on the property, then the creditor can force the sale of the home and would be entitled to the proceeds from the 1/2 interest of the spouse who owes the debt. Generally, this would not be done in the bankruptcy court, the creditor would do a foreclosure in state court after obtaining the approval of the bankruptcy court.
Answered on Jul 30th, 2014 at 5:51 PM
Probably yes, if the homestead exemption doesn't fully protect the filing spouse's share of the house.
Answered on Jul 30th, 2014 at 5:51 PM
Bankruptcy Attorney serving Huntington Woods, MI
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Detroit Lawyers, PLLC
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In Michigan the debtors can protect their interest in the home equity if they file using the tenancy of the entireties if the non filing spouse isn't liable for the debt.
Answered on Jul 30th, 2014 at 9:14 AM