Hello and thank you for allowing me the opportunity to assist you.
There are various rules regarding how much equity
can be protected in a homestead, but generally speaking if your parents have $75,000 of equity or less (or $125,000 of equity of less if over age 65), then they can protect their house. If they have substantially more equity than that, then the bankruptcy trustee
will likely sell the house to repay unsecured creditors. Unfortunately, the future settlement will be considered property of the bankruptcy estate, so those funds will be used to repay unsecured creditors. However, Social Security benefits and most retirement accounts are protected.
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