Can my mother file bankruptcy after reverse mortgage? 20 Answers as of July 04, 2013

My mother reverse-mortgaged her house; now with more debt, can she declare bankruptcy and retain any of her home equity?

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Financial Relief Law Center
Financial Relief Law Center | Mark Alonso
It would work the same way as if she had a forward mortgage on the property-if there is equity in the property, even after the reverse mortgage has been acquired, then you need to see if that equity is exempt in either of the CA exemption schemes. The reverse mortgage often times can eat up remaining equity, depending on how long she's had the loan. Nevertheless, still check to see if any equity would be exempt.
Answer Applies to: California
Replied: 7/14/2011
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
Sounds like she sold her equity to the reverse mortgage lenders. Someone needs to look at the contact. Make an appointment to see a lawyer.
Answer Applies to: California
Replied: 7/13/2011
Mercado & Hartung, PLLC
Mercado & Hartung, PLLC | Christopher J. Mercado
The equity can probably be protected under a exemption. However, the mortgage will still be secured by the property.
Answer Applies to: Washington
Replied: 7/12/2011
CONSUMER PROTECTION ASSISTANCE COALITION, INC. (DE).
CONSUMER PROTECTION ASSISTANCE COALITION, INC. (DE). | Gary Lee Lane
Can file but not keep equity.
Answer Applies to: California
Replied: 7/4/2013
California's Largest Family of Attorneys
California's Largest Family of Attorneys | Doan Law Firm
Yes, she can file bankruptcy but cannot regain any of the equity. She can only keep the equity that she currently has in the house if it is less than or equal to the applicable federal or state statutory exemptions.
Answer Applies to: California
Replied: 7/12/2011
    Dearbonn Law Offices
    Dearbonn Law Offices | Ajibola Oluyemisi Oladapo
    Yes, she may.
    Answer Applies to: Washington
    Replied: 6/10/2013
    Law Offices of Joseph A. Mannis
    Law Offices of Joseph A. Mannis | Todd Mannis
    Yes, she may, depending upon the amount of equity in the home. Make sure, however, that the lender does not have any provisions whereby bankruptcy could be an issue.
    Answer Applies to: California
    Replied: 7/11/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    Homestead laws protect equity in circumstances where there has been a reverse mortgage. The amount of exemption varies between $50.000 and $175,000 depending on marital status and age. Consult with an attorney specializing in bankruptcy law for advice in this connection.
    Answer Applies to: California
    Replied: 7/11/2011
    Colorado Legal Solutions
    Colorado Legal Solutions | Stephen Harkess
    Your mother can file bankruptcy. Her reverse mortgage will be unaffected. She should consult an attorney to ensure that her home equity will be protected by the applicable homestead exemption. As long as that is the case, she should be able to keep her house.
    Answer Applies to: Colorado
    Replied: 7/11/2011
    Kevin Bluitt, Attorney at Law
    Kevin Bluitt, Attorney at Law | Kevin Bluitt
    Yes, I recently had a Florida bankruptcy client file a petition with a reverse mortgage...my client reaffirmed the debt and the bank and trustee had no objection.... client was granted granted a discharge.
    Answer Applies to: Florida
    Replied: 7/11/2011
    Law Office of Eric Ridley
    Law Office of Eric Ridley | Eric Ridley
    Your mother's ability to seek protection under the bankruptcy code will not be significantly affected by the existence of her reverse mortgage. However, any equity or cash will accrue as an asset during her filing, and will affect the calculations.
    Answer Applies to: California
    Replied: 7/11/2011
    The Schreiber Law Firm
    The Schreiber Law Firm | Jeffrey D. Schreiber
    No. A reverse mortgage is different from a regular mortgage. If she is relying on the reverse mortgage to make the payments each month (it comes from the reverse mortgage amount so she does not have to make the payments), if she files bankruptcy, the lender will no longer be required to make the payments. She will then have to start making the monthly payments, and if she does not, they can foreclose. Before filing any bankruptcy with a reverse mortgage, please consult an attorney who us familiar with bankruptcy and reverse mortgages. Otherwise there is a very real chance of losing the home if she cannot make the payments on her own.
    Answer Applies to: California
    Replied: 7/11/2011
    Lake Forest Bankruptcy
    Lake Forest Bankruptcy | Anerio V. Altman, Esq.
    The answer is "maybe" depending upon how much equity remains in the house, and depending upon whether she has other property that could be sold by the Chapter 7 Trustee. Definitely consult with an attorney before filing. Someone has to sit down and look at the numbers in the case.
    Answer Applies to: California
    Replied: 7/11/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    She can file. The numbers determine if she loses her home. Real estate secured by a reverse mortgage is an asset. The equity in that real estate asset is determined the same way as any other asset. Determine what the fair market value of the property is through appraisals or market evaluations, deduct the amount of the secured loan and factor in the cost of sale. Whatever amount is remaining is the equity or ownership amount of the real estate. A trustee in a Chapter 7 bankruptcy case can liquidate real estate secured by a reverse mortgage if there is available equity above and beyond what a debtor can protect as exempt. The trustee may have to pay the holder of the reverse mortgage a pre-payment penalty if one is provided for in the mortgage documents. In the case of real estate with significant equity, the pre-payment penalty will not deter trustee from liquidating the property. She needs an experienced lawyer.
    Answer Applies to: Georgia
    Replied: 7/11/2011
    Ursula G. Barrios Law
    Ursula G. Barrios Law | Guillermo Machado
    Homesteads up to $175K in home equity. If your mother has less than this, she can protect home in Bankruptcy.
    Answer Applies to: California
    Replied: 7/4/2013
    Carballo Law Offices
    Carballo Law Offices | Tony E. Carballo
    Yes but she must be able to exempt the amount of equity in the home. The amount of exemption to which she is entitled depends on her marital status, age and maybe income. She has at least $75,000 exemption and possibly more. You need to consult with an attorney on the amount of her exemption.
    Answer Applies to: California
    Replied: 7/11/2011
    Bird & VanDyke, Inc.
    Bird & VanDyke, Inc. | David VanDyke
    Yes. I have filed many bks for clients having reverse mortgages.
    Answer Applies to: California
    Replied: 6/10/2013
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