When an individual files bankruptcy, the court will look at the asset value and amount owed on it to determine if there is any equity
that can be used to pay the bankruptcy estate. Take the fair market value, then subtract costs of sale, (roughly 6% of that value) then subtract the mortgage balances. The remaining figure is the equity in the home. Divide it by the # XXXXX owners, then that would be the debtor's share of equity. Then you can subtract the exemption amount, in New Hampshire, it is $100,000 of equity. So, if there is no equity left, then the home will not be liquidated in the bankruptcy.
New Hampshire Real Estate Exemption (the Homestead Exemption)
Up to $100,000 of equity in a debtor's homestead can be protected.
So, you are responsible for the mortgage payments regardless of what your cosigner does. If there is no equity after the exemption, you can keep the condo, and continue making payments, taxes
, insurance etc. They can no longer collect from your cosigner unless they sign reaffirmation
agreement with the lender to stay responsible for the loan payments after the bankruptcy. The bankruptcy will have no effect then on your ability to keep the property. The title will stay in both names unless your cosigner quitclaims it to you. I would have them wait until after the case to quitclaim, as transfers throw up red flags in a bankruptcy case. You should be ok otherwise, and can try to refinance the loan into your name after the bankruptcy discharges your cosigner's responsibility for the debt.
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