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We have a very complicated situation at home (Chicago) at this point and need help to determine what may be the best route to take.

My husband and I have lived in our own home for almost 2 years now. However, his name is still part of the deed of the home which his dad and brother is currently living in. The home which his dad and brother is currently living in has a first mortgage loan of $360,000 still owed on it. They also took out a line of credit for $90,000. The brother and dad owns a construction business together and had taken out $1,800,000 under both their names for a project that went sour. Because the contruction business is a small one, they have never really distinguished how their cash (personal or business) is used. Even the $90,000 line of credit was used to fund this project.

Now the dad wants to file bankruptcy since he has no income. His brother is also thinking about filing for banruptcy. We are afraid that if one or both decide to file for either chapter 13 or 7, we would be responsible for all the debt on their home since my husband's name is on it. Should we do a quit claim deed? Would that get us off the hook since we had nothing to do with the business, had not taken the loans out in our name, and have not lived in the home for the last 2-3 years?

smithsussane · Posted: Wed Nov 18, 2009 8:14 pm Post subject:

Hi Karina!

Welcome to forums!

As your husband's name is not mentioned on the mortgage docs, the lenders will not be able to make him liable for the loans. He will only lose the property if his father and/or brother file bankruptcy. The bankruptcy trustee would sell off the property and recover the dues to pay off their creditors. However, I think, if your husband wants, he can quitclaim the property to his brother and father. However, before taking any step, I would suggest you to consult a bankruptcy attorney.

Feel free to ask if you've further queries.

Sussane

Guest

Thanks Sussane!

One other question. In a case like this where my dad in law's construction company finances are intermixed with his personal finances, should he file bankruptcy as a company (they are incorporated) or should he file as an individual or both? I know that normally since they are a corporation, bankruptcy shouldn't affect his personal assets and such, however, because he has used his personal credit cards, and taken out personal loans to fund his company in different projects without properly documenting them, would bankruptcy under the company affect all his personal assets?

I understand that we need to consult a legal person for something this complicated, but I'd like to see if anyone knows anything about this so that i can get an idea of what to expect when we do talk to a legal consult.

Posted: Fri Nov 20, 2009 11:01 pm Post subject:

As your husband has taken personal loans and they haven't been documented properly, there are chances that the bankruptcy may affect his personal assets. Consult a bankruptcy attorney immediately.

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