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I've got a buddy in foreclosure trying to...

Resolved • Response time 44 minutes

3 Jun 2013

I've got a buddy in foreclosure trying to stop the sale. House is in his wife's name. She cannot file BK (chapter 13) as it would probably make her lose her job due to a BK affecting her security clearances, I believe it is. She can put him on title enabling him to file for BK protection to stop the sale, but the question is, and contingent upon her putting him on title so he can file being accurate; since they are married, could HIS filing of a BK, in his name, adversely affect her, similar to if she filed BK herself?
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3 Jun 2013

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Bankruptcy Lawyer's response
3 Jun 2013
Roger
Roger
Litigation Attorney
Hi - my name is XXXX XXX I'm a Bankruptcy attorney. Thanks for your question. There are a few things you need to consider before doing this. First, if the loan is in his wife's name/his and his wife's name, then placing his name on the deed isn't going to change that. Thus, if the loan or property goes into bankruptcy, then she would be indirectly involved, and the bankruptcy would likely show up on her credit report in terms of the mortgage loan and any other joint loan being identified as being in bankruptcy. Second, IF his name is XXX XX the mortgage, then his filing will not affect the loan or the lender's right to foreclose -- because he doesn't owe the money. Thus, he would not even have to list the lender as a creditor, but he would have to list the property as an asset.....and the lender would likely just file a motion to lift the stay and take his interest in the property and continue toward foreclosure. However, because Georgia is not a community property state, she would not have to file bankruptcy - - he could file separately. But, depending on who the loan's name is XX, XX may not help anything.
3 Jun 2013
Customer reply
3 Jun 2013
Hmmm...this will be my 3rd attempt to reply; as I'm checking what I typed, it simply disappears. I believe you're saying that since he's not on the note, that if his wife adds him to title today, that he lists the property as an asset and that his filing BK does not affect his wife's credit, but that the lender will likely move to lift the stay. Correct? He has a lawsuit ready to file to prevent the FC, but due to the recent You v Chase decision, needs to amend it first, but the sale is set for tomorrow. He's not comfortable that filing what he has now will cause the district court to stay the sale, so he needs to do a 13 to give him a little breathing room. If the district court does not grant the stay of tomorrow's sale, he's in the unenviable position of trying to set the FC aside. He'll likely dismiss the 13 prior to the creditor's hearing, if not at the expiration of the 14 days to submit the rest of his docs, so it sounds like he would dismiss himself before the lender could get a hearing on lifting the stay. Correct? The thinking is that he'll get the suit filed before they can crank up the FC process again, forcing it to be dealt with judicially instead of non-judicially, and while they still hold title. Does this make sense? Additionally, if you are well versed on what the law demands/allows for in forcing a non-judicial FC to be done as a judicial FC, I'll pose that as a new question. Thanks.
3 Jun 2013
Bankruptcy Lawyer's response
3 Jun 2013
Roger
Roger
Litigation Attorney
Since he's not on the note, there's not a lot he can do against the lender because there's no relationship between the two. It is very unlikely that he could actually sue the lender in regard to the loan because he's not a borrower. Instead, his wife would have to be the one to sue. However, if he has an ownership interest in the property, then the lender would likely still need to file a motion to lift the stay as to his ownership interest in the property in order to proceed with foreclosure. They could also challenge the timing of the property interest begin given as fraudulent since this was done so close to the bankruptcy filing. Usually, any transfer from or to a family member within a year of filing can be viewed as possibly fraudulent. Nevertheless, if he's in bankruptcy, the lender would likely file to lift the stay to proceed.
3 Jun 2013
Customer reply
3 Jun 2013
Right, maybe just suit in wife's same, but once he's on title he will have standing to bring an action against the lender if they are violating the law in attempting to affect his property in any way, I would argue. If title change declared fraudulent, would that be criminally as in go to jail, or civilly as in having the title change voided? Main concern is, and considering he does not list the creditor, and the short time the BK would be active, wouldn't he have probably dismissed before any action was taken to involve her lender; meaning that it would not show up that the loan was involved in a BK case? He could conceivably dismiss a couple of days after filing, and as long as it still threw the lender back into restarting the FC process, he'd have plenty of time to get into district court.
3 Jun 2013
Bankruptcy Lawyer's response
3 Jun 2013
Roger
Roger
Litigation Attorney
Well, your buddy took title to the property SUBJECT TO the lender's lien, so his standing is going to be very limited. It would be better for the wife to sue and for him maybe to join as an interested party. As for the loan appearing as being in bankruptcy in credit records/reports, that's a tough call. It really just depends on the timing of credit agencies updating its information in relation to the filing - - and who knows when that would occur in relation to his filing. But, if this all happens within a few weeks, there's a good chance it would be over before any credit report would display a bankruptcy notation.
3 Jun 2013
Customer reply
3 Jun 2013
So if he files tomorrow and dismisses the next day, it's virtually impossible for it to show up, since the lender would not even be aware of it having been filed? If the lender discovers three weeks from now that he filed and dismissed, could they even report it? Also, are you up on the judicial/non-judicial conversion?
3 Jun 2013
Bankruptcy Lawyer's response
3 Jun 2013
Roger
Roger
Yes, that's probably a fair assessment. The lender could report this, but it is very unlikely if you're in and out that quickly. I am familiar with judicial foreclosures and non-judicial foreclosures, generally.
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Roger
Roger
Litigation Attorney
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3 Jun 2013
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