Question BK for the eldery

[laura58]

Hi,I have a question. I just found out my 80 yr old mother is 25k in debt.Her modest home is pd off for.She has no savings,zero adsets.I want her to file for BK to save the house after she expires.This stress is def killing her.We live in MI.Is there anyway to save the house from the creditors? Thank-you.

[keepmine]

Loooks like your mother can exempt nearly $53K in equity in her home.

http://www.thebankruptcysite.org/exemptions/michigan.html

Most bk lawyers will give a free or lowcost initial consultation. Speak with a few and get all of your mothers optons explained.

[keepsmiling]

I don't know about MI, but here 53K wouldn't cover very much. What do you plan to do with the home upon her death?
How far behind is she? If you are hoping to keep the house, perhaps a settlement of some kind is in order, shared amongst whoever will be inheriting.

[df04527]

Home is paid for OP said.

[keepsmiling]

Yep, got that. Which means they will take it if she files bk unless it's only worth what she can exempt- which I doubt, but maybe in MI.

[laura58]

With the market the way it is the value is maybe 65k.Needs major repairs.I'm the sole heir.I plan on fixing it up and living here. As of it,shes not behind.She survives on 1250 a mth .That doesnt leave a lot left for taxes,insurance,consumers ect.

[keepmine]

I'd suggest you get a certified apprasial and find out the real market value. Keep in mind that, trustees will face the same expenses in selling as any other homeowner. Real estate commissions, closing costs, repairs etc. Plus, buyers trying to negotiate a lower sale price. You may be surprised at what the home would really net.

[laura58]

Thank-you.This is very confusing.Sad a woman that worked all her life has zero assets to fall back on.

[TheBajan]

Laura58,

I'm also in Michigan. There is a Bk law on the books specific to Michigan that allowed us to keep our paid for rental home. It has to do with the way the property is titled. You would have to use the Michigan laws rather than the federal but it worked for us. I will say that not many attorneys were knowledgeable about this and it took speaking to several before we found one who knew anything about this. Until then, everyone was telling us we would lose the property, our autos, and our home. Go to some free consultations but make sure your atty is aware of the Michigan rules. This is a VERY OLD AND LITTLE USED exemption but it's out there.

Best regards and welcome!

[df04527]

Her asset is her paid for home so focus on getting an appraisal as keepmine suggested. Once you have that many BK attornies will do free consultations, interview several, read the stickies here and ask questions. You have found the right place. Welcome to the forum.

[TheBajan]

This is the part of the Michigan specific law that allowed us to keep our property.

Homestead
600.5451 - Real property, including condominium, up to $35,300(if over 65 or disabled, up to $52,925); but may not exceed 1 lot in a city, town, or village, or 40 acres elsewhere. Spouse or child of deceased owner may claim the exemption. Unmarried co-owners and spouses may not double. Tenancies by the entirety are exempt without limit as to debts of one spouse.

I can't say I understand how it works but bring it up when you talk go to the free consultations. See if it helps.

Good luck.

[keepsmiling]

Baj, I think that rule only applies to married couples. If mom is a widow, it will not apply. Hope I'm wrong
BUT if the house is only worth 65k (here in NJ such a thing is virtually nonexistent, so it's hard for me to imagine) then you may be safe. As keepmine says, the tt would incur the cost of an agent, possible back taxes, etc, so he/she needs to figure that number in. A tt might try to negotiate a settlement with Mom for some of the excess equity, whether real or imagined, if the number is that close. Unless you get a very understanding human being for a tt. It does happen occasionally.

OP--- you are going to need an appraisal so you can make educated decisions. Start for a ballpark by looking at Zillow, but in a case like this, you are going to want something more sophisticated. Could be you will have a little bit of a battle on your hands here and you will need as much on your side as possible.. Do start making appointments with at LEAST 3 attorneys for free sitdowns. Maybe there is another angle or a wildcard you can stack.

Welcome to the forum. Keep chatting with us, we'll try to help as much as we can.

[tobee43]

i would never suggest this to anyone, but in this case it may be the answer....either get a home equity or something of that nature and pay the debt off. get the POA for you for the house and durable POA if she can't handle her finances any longer...get an atty to help to make certain it's filed with the county.

if you just leave it they will go after her estate at a later time. also make certain the debt is legit. i just got one for my mom...bless her soul who is 96 and bed ridden...i got a 8k sprint cell bill in her name. i have to admit i did have to chuckle a bit, but it was no laughing matter. apparently, some one found her ss on line and her old last name and just went crazy. i called sprint and told them to pound salt and don't bother her they actually traced the phone to a city she has never been in. the reason i'm telling you this, is first make certain those charges are hers, and if they are, then see if you can just settle and get them off the records.

chances are they will settle for much less.

[TheBajan]

Baj, I think that rule only applies to married couples. If mom is a widow, it will not apply. Hope I'm wrong

You may be right about that but I hope you're wrong too. I know is was all about the way it was titled. It had to be titled in both of our names and also read "Husband and Wife" and our debts could not be joint. Thankfully, they weren't. By some mistake in paperwork, even our second mortgage was in my husbands name only. All of our credit cards were either in his name or mine but not in both. Our atty said that's why it would work. It sounds like the OP's mom is so close on the exemption allowance that it's worth further investigation to check out and be certain of her options.

Hopefully she will keep us all posted.

[tobee43]

the problem here, is if it is truly the OP's moms debts something needs to be done and get them cleared. no way is a bk going to fly with a home that is in paid in full. that's why it would be so much better to just get the debt dealt with.

i would leave the home out of it, if there is anyway to do that. the courts don't like collectors pounding on an 80 year old sweet lady.