If our coowner of second home is filing bankrupcy what happens to us? 12 Answers as of June 03, 2011

We bought a beach condo with another couple in 2007. They have been unemployed for 2 years and walked away from the condo obligation 5 months ago. We are trying to refinance but are $60,000.00 underwater. Current lender advised us to wait and show proof after 1 year of paying mortgage and refinance under a federal program that you don't have to have an appraisal. Now the other couple may file bankruptcy. How will that affect us?

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The Law Office of Mark J. Markus
The Law Office of Mark J. Markus | Mark Markus
If there's no equity in the property, her bankruptcy shouldn't affect you at all. However, you obviously have to deal with the secured debt on the property to prevent foreclosure.
Answer Applies to: California
Replied: 6/3/2011
Mercado & Hartung, PLLC
Mercado & Hartung, PLLC | Christopher J. Mercado
The property will likely be covered by an exemption.
Answer Applies to: Washington
Replied: 6/3/2011
Greifendorff Law Offices, PC
Greifendorff Law Offices, PC | Christine Wilton
If a co-debtor files bankruptcy, it eliminates their legal obligation to pay the debt. Nothing happens to you. You're still legally obligated on the debt.
Answer Applies to: California
Replied: 6/3/2011
Burnham & Associates
Burnham & Associates | Stephanie K. Burnham
The other couple's obligations to pay the debt will be eliminated if they file Bankruptcy. This means that they will not have to pay the debt, but in order for the property to remain out of foreclosure you will need to pay the debt. You should seek to obtain a deed transferring the property to you as you are now going to be obligated on the entire debt. There are very specific steps you should take depending on whether or not Bankruptcy has been filed, and what you should do when it is filed. You will need to seek a Bankruptcy Attorney to assist you in protecting your claim as a "creditor of the estate" and protecting your interest in the property.
Answer Applies to: New Hampshire
Replied: 6/3/2011
Daniel Hoarfrost, Attorney at Law
Daniel Hoarfrost, Attorney at Law | Daniel Hoarfrost
The co-owner's bankruptcy doesn't really change your position.It just means you can't sue them for contribution.Your position with the mortgage lender is still the same.
Answer Applies to: Oregon
Replied: 6/3/2011
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    You can refinance without them. Get a quit claim deed from them so the title is in your name.
    Answer Applies to: California
    Replied: 6/3/2011
    The Schreiber Law Firm
    The Schreiber Law Firm | Jeffrey D. Schreiber
    As far as payment is concerned, since the other couple is not paying now, whether they file bankruptcy or not does not really affect you since the bankruptcy legally eliminates their obligation to pay. So either way you must keep up the payments or the lender can foreclose. If the lender forecloses and if the other couple files bankruptcy, the only persons the bank can come after is you. Another matter is it sounds like the other couple is still no title. If they are not going to make the payments and you are, then I would have them deed their interest so later you could refinance or sell without having to get them to sign the title then.
    Answer Applies to: California
    Replied: 6/3/2011
    Indianapolis Bankruptcy Law Office of Eric C. Lewis
    Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
    Since there is no equity in the condo, it's likely that there will not be any affect implicating you in their bankruptcy.
    Answer Applies to: Indiana
    Replied: 6/3/2011
    Law Office of Jackie Robert Geller
    Law Office of Jackie Robert Geller | Jackie Robert Geller
    If they file for bankruptcy, they will have to disclose their interest in the condo. Technically, the trustee in their case will become your new partner, but if the condo is truly underwater as you say, then probably the trustee will not be interested in selling their interest and the other couple will end up back in control of it. Their bankruptcy will not affect you, but they won't be able to refinance.
    Answer Applies to: California
    Replied: 6/2/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    See a lawyer immediately. Generally if they go bankrupt you remain liable. Your lender could be trying to screw you and you should not talk to them until you see a lawyer. Under the facts you give, they very possibly are lying to you.
    Answer Applies to: Georgia
    Replied: 6/2/2011
    Law Offices of Joseph A. Mannis
    Law Offices of Joseph A. Mannis | Todd Mannis
    They will discharge their obligation, leaving you guys liable by yourselves.
    Answer Applies to: California
    Replied: 6/2/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    When the co-owner of property is filing bankruptcy it depends on the facts as to what will happen. In this case you state that there is no equity. In that instance your rights in the property will be unaffected after their bankruptcy. There are some other factors as to the property during the bankruptcy. Consult an attorney to discuss rights and obligations.
    Answer Applies to: California
    Replied: 6/2/2011
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