Can I file bankruptcy on this loan without it affecting my father? 15 Answers as of February 18, 2014

My father and I live in a house together; I am also on the deed but not on the first mortgage. The company of the equity loan had me sign that loan with my father.

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Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
Sorry form the delay in answering. It should not affect your father's credit. BUT you must be careful that the property is exempt - because if you have surplus equity the trustee will want to sell it.
Answer Applies to: California
Replied: 2/18/2014
Heineman Law Office
Heineman Law Office | Jeff Heineman
Bankruptcy will affect your father is certain ways. First, if you file a chapter 7, you will receive a discharge of your liability for your debts even debts like mortgages/equity loans secured to houses. However, if you continue paying the equity line, you will have no problems with the bank. You could also reaffirm the equity line debt, but I would advise against it generally. The question with any home is how much equity you have in the home. Likely, your homestead exemption ($100,000 of equity protection) is enough. There are secondary questions about who contributed what to the down-payment of the home, who may have more equity in it, etc.. However, those questions would need to be addressed in a consultation.
Answer Applies to: Idaho
Replied: 2/13/2014
Stuart P Gelberg
Stuart P Gelberg | Stuart P Gelberg
It depends on what you mean by "affect". The loan will not go into default because you filed bkry. The bkry will not affect his credit but the loan will carry a notation that it is in bkry.
Answer Applies to: New York
Replied: 2/13/2014
Kirby G. Moss PC | Kirby G. Moss
It would affect your Dad if he's not paying the equity loan. If he's paying it, likely no effect on him.
Answer Applies to: Indiana
Replied: 2/10/2014
Garner Law Office
Garner Law Office | Daniel Garner
Whenever you file bankruptcy, you are required to list all your debts regardless of your intentions to repay them or not. Therefore, you must list the home equity loan as a debt and, since it is secured by the home you share with your father, you must state whether you want to keep making the payments or not. If you don't agree to remain responsible for it, the lender has the right to foreclose if the payments fall behind. The language in the promissory note will define what constitutes a default. So, unless your father has the means to pay the loan himself, a bankruptcy is very likely to affect his ability to stay in the house. You should also consider whether you can exempt your interest in the house if you file bankruptcy. Every state has its own "homestead exemptions" but if you cannot fully exempt your interest in the house, the trustee could force you to sell it. In that scenario, I would recommend that both you and your father consider a Chapter 13 bankruptcy which would allow you to pay the trustee the non-exempt value in your home and other assets over a period of 3 to 5 years. A chapter 13 requires a steady source of income from which to make your monthly payments, and could also present an opportunity for you both to rid yourselves of the equity loan. You should seek legal advice if you want to explore the possibilities in a Chapter 13, as it is quite complicated.
Answer Applies to: Oregon
Replied: 2/13/2014
    Law Office of Lynnmarie A. Johnson
    Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
    As long as you are current on the note, your filing bankruptcy should not affect your father as long as he understands that he alone will be responsible for the mortgage. If you did not to pay the note, he alone will be responsible for the note and any deficiency if the house goes back to the mortgage company.
    Answer Applies to: Michigan
    Replied: 2/10/2014
    Patrick W. Currin, Attorney at Law | Patrick Currin
    If you are on the deed, then you have an interest in the property and you must disclose that. The mortgage affects the value of the home and thus, your interest, however.
    Answer Applies to: California
    Replied: 2/10/2014
    Law Offices of Linda Rose Fessler | Linda Fessler
    You can file bankruptcy, but your father will still be on the hook for the second, but as long as he keeps making payments, it will be fine.
    Answer Applies to: California
    Replied: 2/10/2014
    Law Office of Robert Sisson | Robert Sisson
    If you file for bankruptcy, the bank will likely want you to reaffirm on your portion of the note.
    Answer Applies to: Wisconsin
    Replied: 2/10/2014
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    If you have co-signed a loan with someone and file bankruptcy, the creditor on that loan will report that this loan is "involved in a bankruptcy" on your father's credit report. That is an accurate statement. However, unless a mistake has been made, that report should not damage your father's credit score.
    Answer Applies to: Nevada
    Replied: 2/10/2014
    Goldsmith & Guymon
    Goldsmith & Guymon | Marjorie Guymon
    As long as your father continue to pay on the first and second mortgage his credit and home ownership will remain on affected.
    Answer Applies to: Nevada
    Replied: 2/13/2014
    Law Office of Pho Ethan Tran PLLC
    Law Office of Pho Ethan Tran PLLC | Pho Ethan Tran
    Maybe. Unless you reaffirm your mortgage debt during bankruptcy proceedings, your father will become solely responsible for repaying the debt. And if your father does not make the payments on time, the creditor can take legal action to foreclose on the property to collect the debt.
    Answer Applies to: Texas
    Replied: 2/10/2014
    Deborah F Bowinski, Attorney & Counselor at Law | Debby Bowinski
    It may depend upon how much equity there is in the property. The loan will not be problematic as long as the payments are current, but the value I your ownership interest could be. You should retain a bankruptcy lawyer to make sure you protect what you have I the greatest extent possible.
    Answer Applies to: Colorado
    Replied: 2/10/2014
    Faletti Law Office PC | Harold Faletti
    Only your debts can be discharged in your bankruptcy. Because you and your father are co-makers of the note, the two of have joint and several liability for the debt, meaning that the creditor may sue either of you for the full amount of the debt upon default.
    Answer Applies to: Colorado
    Replied: 2/10/2014
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    Your father would still be liable for the loan even though you filed bankruptcy.
    Answer Applies to: New York
    Replied: 2/13/2014
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