Nope . . . she doesn’t own the house and it’s not a part of her
bankruptcy estate. The automatic stay impacts her liability and may
prevent the lender from foreclosing . . . but the asset itself no longer
belongs to her and won’t be effected.
Sub2 seller claim bankruptcy…what happen? - Posted by Amanda-NY
Posted by Amanda-NY on April 30, 2005 at 10:37:42:
Hi all.
I came across the situation which I don’t understand how to deal with. This is not the deal I am dealing with; however, I would like to know the answer.
Here is the situation.
The owner of the house (mother) recorded deed to her son.
The son lives in the house and make payments for the mortgage. (it is technically sub 2). So legally the son is the owner of the house and mother is responsible for the mortgage.
The mother has financial problem and claimed bankruptcy recently. (lowyer hasn’t filed yet)
My question is when she claims bankruptcy, is the house going to foreclosure? Or it won’t since the house is legally owned by her son? I’m not sure if the son makes payments on time or not, but I know the fact when he can’t make a payment, she (mother) helps him and made a payment.
The BK trustee can unwind the sales transaction, particularly if there is any equity in the property. This depends on how long ago the deed was transferred, most look backs are for a 1 year period but can look back as long as 4 years.
If there is no equity in the property then the BK trustee might be inclined to release the house from the BK action. The buyer, son, would have to request the release of the property.
Doubtful. Mom’s bankruptcy will have little or no effect on son’s
house, provided it was a bona fide transaction. There’s nothing to
release since it’s not mom’s property any more and certainly not an
asset of the estate.
Joe, doesn?t the mother have to include the mortgage in her bankruptcy paper as one of the creditor? Doesn?t that put the house in automatic stay? -whyK