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Damien Bosco
Damien Bosco, Attorney
Category: Real Estate Law
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My father-in-law had a supermarket business with two other

Customer Question

My father-in-law had a supermarket business with two other associates. The business lost money and was closed. There was a debt on a business loan with the small business administration and a pending balance on it, when the that business closed. The three partners were taken to court on the matter and there was a Lien on their personal homes. My brother in law paid the amount on my father-in-law's lien on the house, so that that my father in law could keep his home. One of the other partners had a house in New York, and the court sold it, and took part of the money to pay the debt, and allowed him to retain the rest of the money collected on the sale. The third party had nothing that the court could take. Everybody assumed that the debt was paid in full. A few years went by, and my father in law, as well as the other two partners received a couple of letters from the Department of Treasury of the USA, saying that there was still a balance of almost $200,000 remaining on the original debt (including interest and legal fees). My father in law is now retired and receiving a monthly check of almost $1,000, and he just got a letter saying that starting next month, the Department of Treasury is going to start taking about 25% of his social security monthly income, to make installment payments to the pending balance on the debt. After calling the Department of Treasury to inquire about the debt, he was told that a daily interest rate of 6%, was also being added to the pending debt until it is paid in full. It is my understanding that the other partners got the same letters.
1) Can the Treasure Department put a new lien on my father's in law house, even though his son paid for the lien that was originally put on the house. (The title of house is clear and free at the moment)
2) If so, can my father in law declare himself in bankruptcy to protect his house?
Note: As a requirement on the business loan with the small business administration, all partners had to sign a clause on the original loan contract, agreeing to give up their homestead rights on their homes.
Please call me and let me know what you recommend on this situation and to see if you can do something to help my father in law. My father in law's phone number is:
407 -343 -1486 and mine is(###) ###-#### My email is:***@******.***
Thank you.
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Damien Bosco replied 1 year ago.

Hello. It appears that the Treasury Department is claiming that each of the partners is responsible jointly and severally. This means that all of the partners were responsible to pay the debt even if one of them could not pay it. The originally judgment of the court should indicate what kind of liability if joint and several, meaning all are liable together. Apparently the Treasury Department believes the is the case. Whether your father-in-law going into bankruptcy could protect his house is another question. You state that he waived that right to the homestead exemption, so bankruptcy may not be the answer regarding the house. It does not appear that the Treasury Department is going after the house, but his social security check. as you state. Usually the maximum to garnish wages is 10%. Possibly, bankruptcy could help to relieve the garnishment but may risk the creditor to go after the house. Your Father-in-law could attempt to make a claim against the other partner. Let me know if you have other questions.

Expert:  Damien Bosco replied 1 year ago.

Hello. Do you need clarification or have further questions about this issue? If so, please let me know. Thank you.