How is home ownership affected in bankruptcy? 20 Answers as of August 28, 2013

If a couple separates and the house is in both names, and one files for bankruptcy, how does this affect the home ownership of the other spouse?

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Colorado Legal Solutions
Colorado Legal Solutions | Stephen Harkess
Bankruptcy affects liability for debt. It does not affect title. Talk to your divorce attorney.
Answer Applies to: Colorado
Replied: 8/28/2013
The Law Office of Darren Aronow, PC
The Law Office of Darren Aronow, PC | Darren Aronow
It does not effect ownership unless the trustee seized the property to liquidate. But the filing spouse is no longer liable for the note on the house.
Answer Applies to: New York
Replied: 8/27/2013
Tokarska Law Center
Tokarska Law Center | Kathryn U. Tokarska
With regard to ownership, if the property market value is less than the loans secured by the property OR if the property market value is worth more than the loans secured by the property but the amount (often called owners' equity) that exceeds the liens on the property falls within an allowable exemption and is in fact exempted in the bankruptcy schedules, then the home would not be sold to pay off creditors. In this scenario ownership does not change and both spouses retain property ownership interest. This assumes mortgage loan(s) are not in default. If they are in default, the answer depends on more facts not disclosed.
Answer Applies to: California
Replied: 8/27/2013
Law Office of Robert Sisson | Robert Sisson
You basically have to be current in pymts and reaffirm on the home to keep it.
Answer Applies to: Wisconsin
Replied: 8/27/2013
Stuart P Gelberg
Stuart P Gelberg | Stuart P Gelberg
The non filing spouse retains their interest in the jointly owned property.
Answer Applies to: New York
Replied: 8/27/2013
    Law Office of Susan G. Taylor
    Law Office of Susan G. Taylor | Susan G. Taylor
    It doesn't change the deal with the mortgagee.
    Answer Applies to: Texas
    Replied: 8/27/2013
    Law Office of Lynnmarie A. Johnson
    Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
    The other spouse remains responsible for the entire mortgage, assuming the bankrupt spouse discharged in bankruptcy. As long as the spouse makes the payments, they continue to own the house.
    Answer Applies to: Michigan
    Replied: 8/27/2013
    Law Offices of Joseph A. Mannis
    Law Offices of Joseph A. Mannis | Todd Mannis
    It doesn't change the ownership the question is how much equity there is, and if there is more than you are allowed to exempt (keep), then the Trustee could go after the house.
    Answer Applies to: California
    Replied: 8/27/2013
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    It has no effect, the non-filing party retains their interest, what ever that might be. If there is equity beyond the homestead exemption the trustee might want to sell it and give the non-filing party his/her share of the proceeds. If this happens - get a lawyer asap.
    Answer Applies to: California
    Replied: 8/27/2013
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    Bankruptcy typically doesn't affect home ownership at all unless there is more equity in the property than covered by the exemptions. In Nevada, the homestead exemption is at minimum $125K and can go up to $550K if the home has been owned for several years.
    Answer Applies to: Nevada
    Replied: 8/27/2013
    Danville Law Group | Scott Jordan
    Your ownership interest in the property will not be affected. However, the mortgage bank may stop reporting any payments made to your respective credit reporting agencies, thus affecting your credit rating. It would be best to refinance the loan into the name of the non-filing spouse, if possible.
    Answer Applies to: California
    Replied: 8/27/2013
    Law Office of Michael Johnson
    Law Office of Michael Johnson | Michael Johnson
    Depends on divorce decree and if there is equity. Who ever is to file the bankruptcy should consult with an attorney to make sure the home is protected.
    Answer Applies to: Florida
    Replied: 8/27/2013
    Charles Schneider, P.C.
    Charles Schneider, P.C. | Charles J. Schneider
    This question lacks sufficient information to answer. Separated? Divorced? Separation does not change ownership of a home. Affect? Do you want to know whether you will keep? What is its value? Does it have a mortgage? Do you own it by tenancy by the entities? What other personal or real property do you wish to keep?
    Answer Applies to: Michigan
    Replied: 8/27/2013
    Heineman Law Office
    Heineman Law Office | Jeff Heineman
    Bankruptcy, by itself, does not affect home ownership.
    Answer Applies to: Idaho
    Replied: 8/27/2013
    Law Offices of Patrick Edaburn | Patrick Edaburn
    The answer is going to depend on what is done after the bankruptcy and/or during any divorce. Bankruptcy does not impact ownership on the house, it merely eliminates the personal obligation to pay the mortgage. The bank would still have to foreclose, so if the other party chose to continue paying the mortgage they could potentially keep the house. A more serious concern is the fact that once spouse A files then spouse B (assuming they were on the loan) remains personally liable for the debt. You should consult an attorney for both debt/bankruptcy and family law advice.
    Answer Applies to: California
    Replied: 8/27/2013
    Law Office of Thomas C. Phipps | Thomas C Phipps
    The other spouse till an owner. A creditor of a debtor in a bankruptcy cannot take any collection actions against a co-debtor.
    Answer Applies to: Missouri
    Replied: 8/27/2013
    Richard L. Hirsh, P.C. | Richard L. Hirsh
    The ownership interest of the non-debtor spouse is initially unaffected, however if the trustee believes there is equity in the interest of the debtor's property, the trustee may have the ability to sell the entire property and pay the non-debtor spouse his or her share of the proceeds.
    Answer Applies to: Illinois
    Replied: 8/27/2013
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