Can we file for bankruptcy and what will happen after we file? 18 Answers as of August 12, 2014

We own a house that we are selling to my son on land contract. We can no longer afford the payments as both my husband and I are retired. We are in a financial bind and would like to file bankruptcy. Can we do this while still having the deed to the house? Would we be forced to remove my son from the home? He has done a considerable amount of work remodeling the house and we do not want to kick him out. Is it possible to file bankruptcy under these conditions? Please help us.

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A Fresh Start
A Fresh Start | Dorothy G Bunce
The devil is always going to be in the details. While you can file bankruptcy if you are eligible to do so, this contract will be a bump in the road that could result in questions being asked about this transaction. It is impossible to speculate about the outcome of this transaction.
Answer Applies to: Nevada
Replied: 8/12/2014
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
You need to see a lawyer. I don't know how much equity you have and sales to relatives are suspect. Do not file without consulting with competent counsel.
Answer Applies to: California
Replied: 8/12/2014
Barnhart Law Office
Barnhart Law Office | Bruce C Barnhart
If you file a chapter 7 bankruptcy, the chapter 7 trustee will have the right to collect payments from your son or sell the land contract. You should take the land contract to a bankruptcy attorney for review and discussion.
Answer Applies to: Nebraska
Replied: 8/8/2014
Goldsmith & Guymon
Goldsmith & Guymon | Marjorie Guymon
land sales contracts are treated like mortgages in a bankruptcy proceeding. However it sounds like you are the seller/mortgagee. Pursuant to 11 U.S.C. 704(a)(1) (collect and reduce to money the property of the estate), the trustee can sell any property that isn't exempted pursuant to 11 U.S.C. 522. However, please note the following: 11 U.S.C. 365(i)(1): If the trustee rejects an executory contract of the debtor for the sale of real property . . . under which the purchaser is in possession, such purchaser may treat such contract as terminated or . . . may remain in possession of such real property. 11 U.S.C. 365(i)(2): If such purchaser remains in possession . . . such purchaser shall continue to make all payments due under such contract . . . and the trustee shall deliver title to such purchaser in accordance with the provisions of such contract but is relieved of all other obligations to perform under such contract. So it sounds like the son is already in possession of the home. Accordingly, pursuant to 11 U.S.C. 365(i), he may stay in the home and continue to make payments even if the executory contract is rejected by the trustee. However, the trustee may be able to assign you right to the
Answer Applies to: Nevada
Replied: 8/7/2014
Stephens Gourley & Bywater | David A. Stephens
You can file, but you would have to carefully review the agreements to be sure your son is protected.
Answer Applies to: Nevada
Replied: 8/7/2014
    EDWARD P RUSSELL | EDWARD P RUSSELL
    You can sell the house to your son. He will own it and you would have it as an asset in a bankruptcy. If you do not sell it you should be able to exempt your equity as a homestead exemption. Your son living in the house no effect of the bankruptcy.
    Answer Applies to: Minnesota
    Replied: 8/6/2014
    Garner Law Office
    Garner Law Office | Daniel Garner
    When you file for a Chapter 7 bankruptcy, you surrender all your "non-exempt assets" to the bankruptcy trustee. You would not be allowed to claim the homestead exemption for the house you are selling to your son unless you are actually living there too. It is an asset from the trustee's point of view, so if you want your son to stay in the house, you would have to convince the trustee that the land contract is the best possible use of the house. If your son is allowed to stay in the house, the trustee is likely to claim your son's payments on the contract and may choose not to pay the mortgagee. You would essentially have no say in what happens to the house. It is still your choice whether to file bankruptcy or not, but it is extremely difficult to back out once you have filed a Chapter 7. Therefore, you are wise to investigate the implications before filing. You might want to consider alternatives such as your son assuming your mortgage, so you would be relieved of the payments and he could stay in the house.
    Answer Applies to: Oregon
    Replied: 8/5/2014
    Ronald K. Nims LLC | Ronald K. Nims
    As long as the land contract was a valid and enforceable legal transaction (for example, the deal isn't a disguised gift, where the price is absurdly low for the property or you didn't properly execute a land contract and record it), then the trustee can't take the house away from your son. However, there is a question of whether the land contract has a value in excess of the mortgage. If the land contract is merely a conduit for payments on your mortgage from your son to the bank, then you have no equity in the land contract but if the payments are greater than the amount of the mortgage, then this equity is an asset of the bankruptcy estate and the trustee might attempt to convert it into cash to pay his legal fees and your creditors.
    Answer Applies to: Ohio
    Replied: 8/5/2014
    Patrick W. Currin, Attorney at Law | Patrick Currin
    The house is still yours and you would have to include either its value or the money received as assets in bankruptcy. You would have to figure out the best way to exempt your assets in a potential case based on the value of the equity and your other assets.
    Answer Applies to: California
    Replied: 8/5/2014
    Lynch Law Offices, P.C. | Roseanne N. Lynch
    You need to speak to an attorney right away, before you do any more on the house. There is always a way to file Bankruptcy, but there are a lot of factors involved here and an attorney would have to review the documents and speak with you about your other assets and debts. It is not just an easy answer and you can easily make an error if you do things on your own.
    Answer Applies to: Illinois
    Replied: 8/5/2014
    LAW OFFICE OF RALPH L. WILLIAMS
    LAW OFFICE OF RALPH L. WILLIAMS | RALPH L. WILLIAMS
    The monies due under the land sale contract would have to be included as an asset in a bankruptcy which you may possibly claim as exempt if under the amount of $25,575.00 as provided in Code of Civil Procedure Section 703.140(b)(1). If you file the bankruptcy before any sale or transfer you could claim a homestead exemption of up to $175,000.00 under Code of Civil Procedure Section 704.730 (3) if either spouse is age 65 or older or physically disabled.
    Answer Applies to: California
    Replied: 8/5/2014
    Steele, George, Schofield & Ramos, LLP
    Steele, George, Schofield & Ramos, LLP | Alan E. Ramos
    You haven't provided enough information to answer the question accurately. Depending on the facts, the sale could be set aside by the bankruptcy trustee after you file your bankruptcy petition. You should see an attorney before you enter into any contract of sale with your son.
    Answer Applies to: California
    Replied: 8/5/2014
    Goldberg, Scudieri & Lidenberg, P.C. | Alan J. Goldberg, Esq
    At this point in time, if you transfer the house, the house, the transfer may be set aside as a preferential or fraudulent transfer. There are a number of ways to protect your home, including modification of your loan or filing a Chapter 13 Bankruptcy. This is a complicated situation and you should certainly consult with an attorney.
    Answer Applies to: New York
    Replied: 8/5/2014
    Charles Schneider, P.C.
    Charles Schneider, P.C. | Charles J. Schneider
    These questions are far too involved to answer by email and require much more information than provided. I suggest that you do not transfer any real estate before speaking to an attorney, especially a relative. A free initial consultation is offered.
    Answer Applies to: Michigan
    Replied: 8/5/2014
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    You may want to file prior to selling the house. When it is in your name, you will get a homestead exemption for the equity in your house (the amount depends on your location within NY State) but if you sell the house then you no longer get that exemption.
    Answer Applies to: New York
    Replied: 8/5/2014
    Davis Law SC | D. Nathan Davis
    It is possible that you can file bankruptcy. However, you may not need to file. You need to meet with an attorney and bring all of your bills and discuss the situation with someone who understands what they are doing. Your son has an equitable interest in the property and the Trustee may honor that interest. A lot will depend on how much money and time your son has put into the property. The present value of the property and the amount of any mortgage on the property will also have a significant impact on this issue. Before you see an attorney, get an honest estimate as to what the property would sell for from a real estate agent or even better, an appraiser.
    Answer Applies to: South Carolina
    Replied: 8/5/2014
    Moore Taylor Law Firm, P.A.
    Moore Taylor Law Firm, P.A. | Jane Downey
    You should consult with a bankruptcy specialist. You also may want to look into the HAMP program depending on various factors.
    Answer Applies to: South Carolina
    Replied: 8/5/2014
    Musilli Brennan Associates PLLC
    Musilli Brennan Associates PLLC | John F Brennan
    The land contract is an asset and there is a good chance you son will be making his payments to the trustee in bankruptcy. Call an attorney and get counsel before you make a decision.
    Answer Applies to: Michigan
    Replied: 8/5/2014
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