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Phillips Esq.
Phillips Esq., Attorney-at-Law
Category: Bankruptcy Law
Satisfied Customers: 12925
Experience:  B.A.; M.B.A.; J.D.
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I am half owner in a house with my sister. In spite of my

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I am half owner in a house with my sister. In spite of my admonishment that she could not file bankruptcy if it would risk the house, she went ahead and filed, telling me the atty assured her the house would not be a consideration. Now she tells me that the trustee is filing an objection to her exemption. We currently have abt 40,000 in total equity in the house which is worth about 100,000. It is my understanding that Ohio's homestead exemption is abt 22,000. The trustee seems to be questioning whether the house includes an income property. It is listed on the mortgage, taxes and insurance as a duplex... the trustee seems to think it's a triplex. In truth it could be if we ever had the money to effect the necessary repairs ... and wanted strangers living on the property. To date we have never rented to anyone outside the family. Right now, my sister and I share one half the house and my daughter and her family live upstairs over the garage. We split the cost of the house utilities, taxes, etc. My sister pays 500, I pay 500 and my daughter and her family pays 565 (because there are more of them). Utilities etc. average 1500/month ... higher or lower depending on the weather. My question is ... can the trustee force the sale of the house?
Submitted: 3 years ago.
Category: Bankruptcy Law
Expert:  Phillips Esq. replied 3 years ago.

Thank you for giving me the opportunity to assist you. I encourage you to ask me for clarification, if you are not clear with my Answer.

 

.

Unfortunately, he can if your sister is not able to exempt her share and unable to pay the trustee. The trustee can only go after her interest and not yours since you did not file bankruptcy with her. You live on the property. So, the house is your homestead. Your sister lives on the property, so that is also her homestead. So, I am not sure if the trustee would win here. Currently, your sister is entitled to claim up to $21,625.00 of her equity (interest) in the homesteaded property. If she properly claims the exemption, then her bankruptcy attorney should vigorously defend against the trustee's attempt to treat the property as income property. See Ohio Revised Code Section 2329.66(A)(1a)(b). In any event, the trustee can only go after 50% of the equity and not 100% of the equity.

Customer: replied 3 years ago.

So, taking worst case scenario, she would be given the opportunity to pay the trustee the amount of her equity that was disallowed if any ... BEFORE the house was in danger of being sold? Wouldn't I have to be notified if the house was in danger of being sold? How could they sell a house out from under me when I have nothing to do with the proceedings?

Expert:  Phillips Esq. replied 3 years ago.

 

So, taking worst case scenario, she would be given the opportunity to pay the trustee the amount of her equity that was disallowed if any ... BEFORE the house was in danger of being sold?

 

Response 1: Yes.

 

Wouldn't I have to be notified if the house was in danger of being sold?

 

Response 2: You should be. Otherwise, you can get your own bankruptcy attorney to challenge the trustee's attempt to sell the property without notice to you. Also, if there is a mortgage on the property, the lender must be notified of the sale.

 

How could they sell a house out from under me when I have nothing to do with the proceedings?

 

Response 3: Unfortunately because the person who filed for bankruptcy protection is part owner of the property. The 50% of the property is now considered bankruptcy estate. However, as I stated previously, I am not certain that trustee would prevail here. Ohio Revised Code 2329.66(A)(1a)(b) is clear as to the homestead exemption. The exact amount has been increased to $21,625.00. Your sister is entitled to claim that property as her homestead:

 

"(A) Every person who is domiciled in this state may hold property exempt from execution, garnishment, attachment, or sale to satisfy a judgment or order, as follows:

(1)(a) In the case of a judgment or order regarding money owed for health care services rendered or health care supplies provided to the person or a dependent of the person, one parcel or item of real or personal property that the person or a dependent of the person uses as a residence. Division (A)(1)(a) of this section does not preclude, affect, or invalidate the creation under this chapter of a judgment lien upon the exempted property but only delays the enforcement of the lien until the property is sold or otherwise transferred by the owner or in accordance with other applicable laws to a person or entity other than the surviving spouse or surviving minor children of the judgment debtor. Every person who is domiciled in this state may hold exempt from a judgment lien created pursuant to division (A)(1)(a) of this section the person's interest, not to exceed twenty thousand two hundred dollars, in the exempted property.

(b) In the case of all other judgments and orders, the person's interest, not to exceed twenty thousand two hundred dollars, in one parcel or item of real or personal property that the person or a dependent of the person uses as a residence." (emphasis added by me)

 

Phillips Esq., Attorney-at-Law
Category: Bankruptcy Law
Satisfied Customers: 12925
Experience: B.A.; M.B.A.; J.D.
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