Question:
Dear Bankruptcy Adviser,
Under the terms of our divorce, my ex-husband is allowed to stay in the house we shared -- as long as he makes the payments. The house is for sale, but we are both on the title and both liable for the mortgage. My ex has had a drop in income and now wants to default on the mortgage, but remain in the home. He will file bankruptcy if the lender threatens foreclosure, in order to extend his living there.
I would like to know if the property can be put into bankruptcy against my will, since he doesn't own the entire house. Could a bankruptcy trustee do anything with his half of the house without my cooperation? Can bankruptcy protect him from his joint debt without my cooperation? Can I attempt to get a court-ordered quitclaim deed from my ex, since he's in contempt of the divorce decree and causing harm to my credit while waiting for a sale in a distressed market?
-- Mary
Answer:
Dear Mary,
There is nothing worse than getting more bad news. At the very least, while you are not going to like what I have to say, you will get a straight answer.
Question No. 1: Can my ex-husband file bankruptcy without my consent?
You have absolutely no control over your ex-husband's pending bankruptcy filing. He can legally file for bankruptcy protection and delay the sale of the house, and there is absolutely nothing you can do about it.
Question No. 2: Can the trustee do anything with half of a house?
When a bankruptcy case is filed, a trustee is assigned to review the paperwork and recommend whether the filer has a right to seek protection. The trustee is looking for assets he or she can sell and give to creditors. Unless there is equity in the house, the trustee will have no interest in the property. So the trustee will be of no help to you.
The more distressing news comes when there is equity in a house. The trustee could force the sale of the property, without your consent, in order to pay creditors. You might have some rights to the equity in the house, but you would have no rights to stop the trustee from selling the property in the event equity exists. Meaning, if you are entitled to half of the equity, you would receive your equitable interest upon the sale. But you could not stop the trustee from selling the property.
