Joint mortgage w/friend, would like to sell house very soon. File now or wait?

[jonnarocka]

[lrprn]

I have 50% ownership of a modest house that I bought with a friend in 2004. We obtained a $0 down conventional mortgage at a respectable fixed interest rate. We each pay half of the payment each month and the loan is 100% current. My quandary is this: it is very important to me that the bankruptcy NOT affect my friend in any way.

Do you and the friend both live in the house currently? If the answer is yes, then you will have to include your friend's income and contributions to the running of the household when you file (although the income unrelated to the running of the household will be subtracted back out later in the Means Test).

My concern is that there might be some notation on her credit report that the loan was included in my bankruptcy, even though it would be immediately reaffirmed and she is not a filer. Is this the case?

This does happen occasionally. All your friend has to do is watch her credit reports with all three agencies very carefully for several months after you file. If anything does appear, she needs to dispute it with the credit agencies immediately and have it removed because it's inaccurate.

Knowing that the property absolutely cannot be sold while the case is still active, I’m not sure about the timing of my filing.

No one can predict the future. Knowing only what you've shared so far, I'd say if you are able to file Ch 7, then do so now so you can use the house and its expenses when you file. Then you can list the house for sale after your case is discharged and closed. That usually takes 90-120 days - not a terribly long time to wait and you won't have to worry about having the trustee involved.

Considering that I’m already 6 months behind on my CC bills, how long can I possibly wait to file my case without serious problems cropping up? I’m guessing that with a lawyer's help there are ways to buy a bit of time if creditors try to take legal action?

Six months is usually about the time original creditors start to think about taking court action, selliing the debt to collectors, or writing it off. Even if the original creditor or a collector was able get a garnishment pushed through the courts before you file, that would stop immediately when you do file. (And that's if your state allows wage garnishment - some states like Texas don't.)

Start by making appointments to speak to 3-4 experienced bk lawyers in your area. You'll find out a great deal about what's going to be possible in your situation and also may get a sense of when it's best to put the house on the market.

Hang in there. You are doing the right thing by gathering information and educating yourself about bankruptcy - the most important step you can take before filing. Give yourself a big pat on the back for doing the right thing for yourself and your friend.

Best of luck - please keep us posted about what you find out during your lawyer interviews. Also keep posting questions as you think of them - we'll help you sort out things as best we can. Welcome to the forum!

[keepmine]

If the equity is negilible, it should make no difference when you file.
In 04, the 3 CRA's settled a classaction lawsuit by agreeing not to report a bk on a cosigners file that didn't file bk.

[jonnarocka]

Thanks so much!

I've been so stressed out about this whole thing & the constant hounding from the CC's isn't helping, but I didn't want to file prematurely just to stop the harrassment. It's a tremendous relief to know that my BK wouldn't affect my friend's credit report, or at least could be removed if it did show up. (Keepmine: thanks for mentioning the class action lawsuit!). I couldn't find any trustworthy info anywhere else about this issue.

lrprn: thanks for reminding me not to try to predict the future, as that is surely an exercise in futility! The one and only timeline I can be reasonably sure about is that of the bankruptcy case, and you're absolutely right that 90-120 days is indeed not too long to wait. I would hate to wait to file and be six months into trying to sell the house with no offers yet, and thinking, "wow, I could have been discharged and case closed months ago! Why on earth did I wait???" The reality is that in this market the house is unlikely to sell quickly, and I don't really know what my situation is going to be after selling. Looking at all of this objectively and trying to consider only what I do know instead of muddling it with 18 things that MIGHT happen, all things considered, right now is really quite a good time to file.

Also, I wasn't aware that my friend's income would have to be included in the household if she still lived here. Fortunately, she doesn't (she moved out when she got married a year and a half ago), so she just pays her half of the mortgage and her share of any repair expenses.

Again, thanks so much to both of you for the information, clarification and encouragement. I'll definitely post updates to the forum as things progress.

I'm so excited to get on the road to a fresh start!