need to save family home

[nd2knowmor]

What is the name of your state?MT

I am ready to file for bankruptcy, but the only thing that keeps me from filing is that my husband had inherited a home from grandparents. The only surviving family members are my husband and his brother. Upon inheritence, we needed to take cash from the home in order to pay off medical liens against property as well because we are located in different state we also cashed out monies to buy our first home. Due to a failed business, we have since sold our own home in order to pay back some business debt. But there is still more debt we need to pay and have decided to bankrupt the remaining debt. Because my husband and I were married at the time and brother was in college, my husband and I were the only ones that could qualify for refi on inheritence home. Therefore the title to the home has all three of us as joint tenants. Now that my husband and I need to file bankruptcy how can preserve the one thing left to my husband and his brother? Home is in state of Hawaii. I have heard that we should look into putting home into a trust therefore the home no longer belongs to us but now to a trust. Is this true? Will this prevent husbands and brothers family home from being taken away?

 

[AttorneyOney]

Don't file, or do anything at all about the property, until you've talked to a bankruptcy attorney. Deeding the house to a trust will not protect it, since a bankruptcy trustee can avoid the transfer as a fraudulent conveyance. It might even void a homestead exemption that you'd otherwise have been entitled to.

Only a debtor's interest in property becomes part of the estate. Generally, when the debtor is a joint tenant, only the debtor's undivided interest is subject to sale. Section 363(h) does, however, allow the trustee to sell the property and divide up the proceeds among the estate and the other owners in some situations. Practically speaking, that means that the debtor or the other owners will have to ransom the property from the trustee if they want to continue owning it.

 

[nd2knowmor]

What do you mean by ransom property? As far as interest our equitable interest in the home is already absorbed by the loan we had previously taken out? So does that mean that brothers interest in home cannot be deemed as interest to trustee?

 

[AttorneyOney]

In a typical 363(h) situation, someone pays the trustee the value of the debtor's interest in order to prevent the property from being sold out from under the owners. Metaphorically, that's like paying ransom to a kidnapper.

Please talk to an attorney before you do anything, however. There may be some reason why your interest in the property would be exempt, in which case you won't need to worry about 363(h) at all. There may be some other thing that, if done prior to filing bankruptcy, will give you a better result than if you didn't do it. It's an attorney's job to ask the questions that will ferret out those things.