real estate, homeownership, homebuying

Can the house I bought with my relatives disappear due to the bankruptcy of the relatives?

Scope of liability in bankruptcy

When you go through bankruptcy cases, you see cases where relatives own the house jointly. For example, parents may share a house with their children, or sisters may buy and rent a house together with the intention of earning pocket money. In this situation, if the person who owns the house wants to file for bankruptcy, the decision is not easy. Because these cases involve the interests of not only the party who wants to go bankrupt, but also other valuable people.

Depending on which state you live in, a certain level of home value can be preserved even if you file for bankruptcy. However, there are many cases where these bankruptcy waiver rules do not apply if you are not living there. In addition, if you buy a house with other relatives, you need to understand the circumstances of each case, as there are many cases where the exemption rule does not apply because there are many cases where it is for investment or other purposes rather than for the purpose of living. It is also important to understand that the law offers some exemption rules.

Let’s take a case that we recently closed. In this case, Mr. Lee, who is very filial, saved his money to buy a small one-room house for his parents to live in in their old age. My parents suffered from some dementia and had no money, using all of their money to pay for Lee’s tuition. Mr. Lee listed the names of his parents along with himself in the house document. However, after a few years, Lee took on credit cards and bank debt to keep the business going, but eventually became unable to pay it off. Tired of the constant debt calls and visits, Mr. Lee wanted to file a bankruptcy, but he could not make a decision because he thought that his parents’ house might disappear, so he came to Song Dong-ho’s General Law Firm.

If this case were left as it is, the Trustee would have ordered the house to be sold and used to pay off Mr. Lee’s debt. However, the bankruptcy team at Song Dong-ho’s general law firm could not see Lee’s filial piety and the sad situation of his parents. So I started negotiating with the bankruptcy manager. We calculated the actual value of the house by understanding the recent sales around the house. Mr. Lee’s house was so old, it was too small an amount to pay off Mr. Lee’s entire debt. On the other hand, if this house was forcibly sold, the parents would have no place to live immediately, and they could not afford to go to a welfare facility for the elderly. He persuaded the bankruptcy manager by using relevant laws and precedents, emphasizing that the pain of bankruptcy for a son who owns a third, even though his parents own the house, is too great. In the end, the bankruptcy manager decided to leave the house where my parents lived, and we were able to complete a successful bankruptcy process. Currently, Mr. Lee is living in the same house with his parents and is planning a new start.

Such situations are not difficult to find around us. Mr. Kim, who recently visited our law firm, also owned a house with his parents in the same way as Mr. Lee. Years ago, my parents bought a $240,000 house with Kim and their names on the house documents to simplify future inheritance. Mr. Kim was running a small shop, but he was forced to expand and owed $300,000 in debt. He thought that expansion would make things better, but his income continued to decline, leaving him unable to pay his debts. For Kim, bankruptcy was the only way out of the current debt pile. However, his parents were strongly opposed to Kim’s bankruptcy. It was because they thought they would lose their home if they file bankruptcy.

After analyzing Kim’s situation, the bankruptcy team at Song law firm came to the conclusion that bankruptcy was the best solution. However, he understood his parents’ concerns and was well aware of why they were against Kim’s bankruptcy. Our bankruptcy team proposed a plan to buy a house with his parents paying $80,000, which is one-third of Kim’s real estate value, or $80,000. Fortunately, his parents did not have enough to pay off Kim’s $300,000 in debt, but they were able to afford a little less than $80,000. With a little help from those around them, their parents bought Kim’s stake worth $80,000, and Mr. Kim successfully filed for bankruptcy and was able to pay off a $300,000 debt.

Bankruptcy is not a panacea for all situations. However, if you think bankruptcy is your best bet, you should analyze your situation and consider how to go bankrupt most effectively. What’s more, if someone close to you is affected by your bankruptcy, your decisions and strategies will inevitably become more prudent.

If you have any questions about bankruptcy, please feel free to contact us at mail@songlawfirm.com.

[View bankruptcy success stories] http://www.songlawfirm.com/contents/successstory?categoryId=12


Song Law Firm provides a free assessment of your bankruptcy potential.

If you would like to use this service, please contact us at mail@songlawfirm.com. Personal information obtained through this service is kept strictly confidential.

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