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Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2815
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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I own a house with another individual in the state of Virginia,

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I own a house with another individual in the state of Virginia, equity about 40K, all hers. I am disabled but looking for work with assets to last only about two more months. I have significant debt, about 150K. I do not want to involve my partener...if I am sued can the house be taken in some way or is it a matter of judgments, reposessed car, etc? If the house can be refinanced in her name only, what timing is required should I eventually need to declare bankruptcy. In short, what steps are requiored such that her equity and her house are not affcted?

Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 7 years ago.
The equity is 1/2 yours if you both own the property, regardless of who invested the money. If the creditors sue, they can put a judgment lien against the title to the property to collect once refinanced or sold. Usually, a judgment creditor does not foreclose, as the cost is too high, with little likelihood of recovery after paying the mortgages, taxes, and foreclosure costs. The home can be refinanced, and you can quitclaim your interest. That transfer has to be disclosed for 2 years before a bankruptcy case is filed. If you live in the home, you may be entitled to the homestead exemption for your state, which allows you to protect some of your share of the equity.
Customer: replied 7 years ago.
If I filed for bankruptcy, does she as co-owner have to file also? Would it affect her credit report? The homestead exemption will protect me to some degree I think. Is only my half of the equity considered? How do I protect her?
Expert:  Terry L. replied 7 years ago.
No, she does not. Co-owners do not need to file a case. They need to stay current on the loan payments, and their credit will not be affected. Only your half of the equity is factored in. Home value minus costs of sale (6% avg) minus mortgages then divide by 2. The result is your equity. Then you subtract the state exemption, the remainder is the exposed equity (if any). If negative, then there is no problem with a bankruptcy filing.
Customer: replied 7 years ago.

One last comment question...

Value about 242k down from 276k the purchase price, mortage is 185k so my equity is then 28.5k - 5k Virginia homestead equal about 23.5k. So, how is this 23.5k affected. What does the court do with it and how does the court obtain it. Are we back to a judgment against the house????


I suppose I should see a local lawyer, thanks

Expert:  Terry L. replied 7 years ago.
The creditor, if sues, can put a lien on this equity. In bankruptcy, you would probably have to file a chapter 13 to protect the equity that has built up. chapter 7, the home could be sold to pay your debts. The co-owner can refinance, and give the cash to the court to pay your debts otherwise.
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