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I rewrote my question to clarify a little
I took out a loan to help a neighbor with some financial problems for his home. I had it secured with a promissory note and recorded at the courthouse with the home as collateral. The loan is now past due and the neighbor is considering filing bankruptcy against me now. If he signs a quit claim deed, could he file chapter 13 for his other debts? I think he is considering chapter 7 because I don't think he cares about hanging onto his home. I am trying to find a winning solution for us both so he can over but I'm not out of all the money I gave him.

smithsussane · Posted: Sun Oct 26, 2008 7:44 pm Post subject:

Hi Guest!

Welcome to the forums!

As far as I can understand from your question, you have taken the loan, but your neighbor was paying the dues. Now that he/she cannot pay the dues, bankruptcy is what that person is thinking. If the person is filing bankruptcy, then it will definitely affect you and your credit. You can give your neighbor the option of deed in lieu and short sale. This will not affect your credit as badly as bankruptcy or foreclosure.

If your neighbor signs a quitclaim deed now, then there are changes that it will be taken as a fraudulent transfer. However, you have mentioned that the mortgage is in your name, so you may consult the lender and a real estate attorney. They will be able to tell you if the quitclaim transfer will be considered as a fraud or not. The neighbor may file a bankruptcy for his other properties.

Feel free to ask if you have further queries.

Sussane

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