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Bankruptcy Law/tenants in common and bankruptcy

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Expert: - 2/23/2009


Question
My mother and her two brothers own a house. I believe they are listed as tenants
in common on the deed. One brother is probably going to declare bankruptcy soon.
What are the implications for my mother and her other brother? Can they be
forced to sell the property? Will a lien be placed on the house that will have
to be satisfied upon the future sale of the property?

Answer

Leon Bayer
The filing of your uncle's bankruptcy case will create a "bankruptcy estate" which is composed of all assets that he owns, including his share of the house.

A person who files bankruptcy is allowed to "exempt" (or keep) certain assets; the assets that can be exempted are generally determined by state law in the state where he resides. His state may or may not have exemptions for him that will be sufficient to protect the value of his share of the property.

A person called the "bankruptcy trustee" is appointed to investigate the financial affairs of the person who files bankruptcy, and recover money from non exempt assets. The trustee will evaluate the worth of your uncle's share of the house. If that share is not fully exempt, the trustee can sell it. Most trustees would probably offer to sell it to the other joint owners. If the co-owners don't buy it from the trustee, the trustee can sell the entire house, keeping your uncle's share of non exempt equity for the bankruptcy estate, and giving the other co-owners their pro rata share of the sales proceeds, minus the costs of sale.

An experienced local bankruptcy attorney should be able to easily tell your mother what to expect in the actual bankruptcy case, and whether or not there is really anything to be worried about.

You can do some general reading on bankruptcy in my Bankruptcy Guide, at http://www.debt-relief-bankruptcy.com/guide-new.asp  

Los Angeles Bankruptcy Lawyer Leon D. Bayer

Expertise

Leon Bayer has successfully represented clients in bankruptcy for over 30 years. He is frequently called upon by the media, the California Bar and other associations to provide insight and help educate attorneys on bankruptcy issues. If you or other readers want to keep up with my blog postings about life in and out of bankruptcy, you can follow my blog at http://www.bankruptcyblogger.org/ and my personal web site at http://www.debt-relief-bankruptcy.com and A Human Guide to Bankruptcy at http://www.thebankruptcyguide.net/ Leon also writes about bankruptcy law for Nolo, see http://www.nolo.com/law-authors/leon-bayer.html and his "Ask Leon" bankruptcy law blog column at http://blog.nolo.com/bankruptcy/

Experience

Leon is a Certified Specialist in Bankruptcy Law by the State Bar of California, and has been a practicing bankruptcy lawyer in Los Angeles, California for 33 years.

Organizations
National Association of Consumer Bankruptcy Lawyers, California Bar Association, Los Angeles County Bar Association.

Publications
Author, ?The Essentials Of Chapter 13,? Daily Journal Report, December 18, 1987.
Contributing Editor, Basic Bankruptcy, California Practice Handbook, Matthew Bender 1992, 1993.
CEB Consultant, CEB-Personal and Small Business Bankruptcy Practice in California, 2003.


Education/Credentials
B.A., J.D.

Awards and Honors
President, 1995-1996-Los Angeles Bankruptcy Forum; Member - Los Angeles County Bar Association Committee on Commercial Law & Bankruptcy, 1988. Law Advisory
Commission-Personal & Small Business Bankruptcy Law of the State Bar of California, 1996-2000

MR. BAYER SAYS: The big banks and credit card companys have been working overtime for many years to undermine the Consitutional right of the American people to be able to claim bankruptcy protection. In 2005 the banking lobby successfully convinced Congress and the President to make the laws and proceedures more complicated, hopeing that it will stymie legitimate people from filing bankruptcy. They succeeded in gaining these complex new legal proceedures by greasing the legislative system with hundreds of millions of dollars in "campaign contributions." The good news for the American people is that while the new laws have made the proceedures needlessly complex to the point where inexperienced people can't help but trip over the maze of new rules and regulations, the process is still doable, especially with a lawyer who is well trained and experienced in this specialty.

Past/Present Clients
I have probably handled something on the order of about 15,000 bankruptcy cases thropughout my career.

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