Home is co owner by all three parties on paper. Home is mortgaged, and due to real estate market amount owed is still greater then the value of the home. One person is about to declare bankruptcy. How will this affect the other two, and the mortgage?
In New Jersey, co owners cannot afford to buy out the third person.
It might no impact them at all, but it depends on a number of factors. If there is a lot of equity in the property and the debtor files Chapter 7, then the trustee might want to sell the property. In many cases, there is no equity and they owner can still keep the property if they can keep making the payments. The lenders often do not want to foreclosure and will gladly keep accepting mortgage payments.
You should consult a local bankruptcy attorney who has experience in dealing with creditor’s rights.
Up to the judge. If the 3 can’t agree, the judge will probably order it sold.
References :
In Canada most often a mortgage is excluded from the bankruptcy. One does not have to abandon the property or the debt associated.
A mortgage that is owed by more than one person can be taken over by the other owners if the bankrupt person does choose to include that property and mortgage in the bankruptcy. If they do not choose to take it over, the property is put up for sale. The other owners, who would ordinarily be on the hook in foreclosure for any shortfall, ride through the bankruptcy and have no debt for the shortfall.
A judge in a bankruptcy court may vary this rule, so that all parties should be represented in that hearing.
References :
It might no impact them at all, but it depends on a number of factors. If there is a lot of equity in the property and the debtor files Chapter 7, then the trustee might want to sell the property. In many cases, there is no equity and they owner can still keep the property if they can keep making the payments. The lenders often do not want to foreclosure and will gladly keep accepting mortgage payments.
You should consult a local bankruptcy attorney who has experience in dealing with creditor’s rights.
References :
http://www.chs-law.com/bankruptcy.html