Ownership of Property with Family

[michelle1971]

My husband owns property along with his father and brother. All of their names are on the deed. The property is paid for and only thing paid is real estate tax each year. This property was willed to them almost two years ago from a family member. My husband and I own a home with a mortgage and it has no equity. How would this work if we would decide to file bankruptcy? We would like to keep our own home, and the other family members are not interested in buying out my husband's share of the other property. We live in Virginia.

Thanks for any help you can offer.

[despritfreya]

Your husband has a 1/3 interest in, what I will presume, is a non-exempt asset. If he files a Chapter 7, the Chapter 7 Trustee will step into his shoes and will attempt to sell the 1/3 interest. I believe the Trustee will 1st offer it to the co-owners. If that does not work and the property cannot be partitioned, the Trustee can sell the entire property pursuant to 11 USC 363(h). The net proceeds will be split 3 ways.

If your husband and the co-owners do not care about the property and you otherwise qualify for a 7, then, I suppose, no big deal if the Trustee forces a sale.

If your husband and the co-owners do care then I believe there are 2 choices:

1. He does not file. You will have to check with a Virginia attorney to make sure there is no way for the Trustee to assert you have some sort of "equitable" interest in the property.

or

2. Both of you file a Chapter 13 and agree to pay the value of your husband's interest in the property to the unsecured creditors.

Your next step is to talk to an attorney in your local community.

[michelle1971]

Thank you for your reply. My husband does have 1/3 ownership. My husband, along with one of the owners would like to sell. The third owner does not want to. If we could sell the property, we could pay off all our debt. We would not even have to think about filing bankruptcy at that point.