Loan secured with someone else's property

[whatif]

I am the borrower on a loan secured by my mother's house. I took out the loan to fix up her home and pay the costs of my dad's funeral. So, I'm the debtor, but the property securing the loan is not mine. How will a trustee/court handle this? Will they allow me to reaffirm?

[HHM]

First, are you sure your mother is not a co-signer, I would think she would have to be in order for you to get a secured loan using property that is not even yours.

Also, your problem will not be with the court or trustee, it will be with the lender and your mother.

The long and short of it is this, if you default, then the bank will look to your mother to pay the loan, if she cannot, then they will try to sell their security (i.e. foreclose their note on the home).

Now that I think about, there is even a more tricky legal question, since the house is not your property, the lender may not need to make a motion to lift the automatic stay because the underlying asset is not part of your bankruptcy estate.

I guess the main question here is, are you prepared to screw over your mother, or have you talked to her about it.

[whatif]

The loan is current, and I intend to keep it so. My question is (was) will the court not allow me to reaffirm because the property securing the loan is not owned by me.

[StaciMM]

Just reread what you wrote-you should be ok, just be prepared to document that you are making the payments.