Here is a question that one of my relatives recently asked me:
"Is it better to file Chapter 7 BK or just wait for the judgment creditor to exercise their lien by forcing a sheriff's sale of recently inherited real estate property?"
I told her to file Chapter 7 BK because at least the BK court would try to get as much money as possible from the sale of the real estate property, and she would at least get the homestead exemption amount, and maybe a little bit more than that. The sheriff's sale, on the other hand, would sell the property to the highest bidder which would be a very low amount, and barely pay off the judgment creditor.
Was I wrong to say that?
What would you do in this situation?
Here are the details of what happened to my Aunt. She is currently 82 years old. About 7 years ago her husband died, leaving her with a lot of bills that she couldn't afford to pay on her fixed income from Social Security. She was living in a senior apartment provided by a state and federal program due to the fact that she was indigent. She was judgment proof at that time because she had no non-exempt assets to take and no non-exempt wages to garnish. After many threatening phone calls and letters, a junk debt buyer called Unifund finally filed a lawsuit against her, and won a judgment against her for over $15,000. They have been unable to do anything with their judgment until recently. The other creditors are still sending letters and making threatening phone calls to her.
Her total outstanding debt from various credit cards is over $34,000.
Her income from Social Security is less than $800 per month.
Then the unthinkable happened. Her son died from a heart attack, leaving a cabin in the town of Show Low to her in his will. According to property tax records (which are always low) the equity in the cabin is over $175,000. Therefore, she is no longer judgment proof.
Unifund somehow found out about this and moved in for the kill. They put a lien on the property through the county recorder's office and are threatening to have a sheriff's sale of the property to pay off the judgment. Things are moving very fast on this. Too fast for her to keep up with all that is going on.
I thought that maybe the automatic stay offered by the bankruptcy court would give her some time to catch up on what is happening, and get rid of all of her creditors instead of just one of them (Unifund), and maybe give her a little bit of money from the homestead exemption-- about $150,000!
One of her friends told her to just sell the cabin, but real estate in that area is not selling very fast right now, and time is of the essence in this matter.
"Is it better to file Chapter 7 BK or just wait for the judgment creditor to exercise their lien by forcing a sheriff's sale of recently inherited real estate property?"
I told her to file Chapter 7 BK because at least the BK court would try to get as much money as possible from the sale of the real estate property, and she would at least get the homestead exemption amount, and maybe a little bit more than that. The sheriff's sale, on the other hand, would sell the property to the highest bidder which would be a very low amount, and barely pay off the judgment creditor.
Was I wrong to say that?
What would you do in this situation?
Here are the details of what happened to my Aunt. She is currently 82 years old. About 7 years ago her husband died, leaving her with a lot of bills that she couldn't afford to pay on her fixed income from Social Security. She was living in a senior apartment provided by a state and federal program due to the fact that she was indigent. She was judgment proof at that time because she had no non-exempt assets to take and no non-exempt wages to garnish. After many threatening phone calls and letters, a junk debt buyer called Unifund finally filed a lawsuit against her, and won a judgment against her for over $15,000. They have been unable to do anything with their judgment until recently. The other creditors are still sending letters and making threatening phone calls to her.
Her total outstanding debt from various credit cards is over $34,000.
Her income from Social Security is less than $800 per month.
Then the unthinkable happened. Her son died from a heart attack, leaving a cabin in the town of Show Low to her in his will. According to property tax records (which are always low) the equity in the cabin is over $175,000. Therefore, she is no longer judgment proof.
Unifund somehow found out about this and moved in for the kill. They put a lien on the property through the county recorder's office and are threatening to have a sheriff's sale of the property to pay off the judgment. Things are moving very fast on this. Too fast for her to keep up with all that is going on.
I thought that maybe the automatic stay offered by the bankruptcy court would give her some time to catch up on what is happening, and get rid of all of her creditors instead of just one of them (Unifund), and maybe give her a little bit of money from the homestead exemption-- about $150,000!
One of her friends told her to just sell the cabin, but real estate in that area is not selling very fast right now, and time is of the essence in this matter.
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