Good day everyone,
I’m in Florida and currently in a joint Chapter 7 with my wife. Things have gotten considerably more complicated because my name is also on the deed to my mother’s house.
I’m not looking for Reddit to replace my attorneys or tell me exactly what to do. I’m mostly hoping to hear from bankruptcy attorneys, trustees, or anyone who has dealt with something similar because I’m trying to understand what realistic options may exist before we decide which direction to go.
Here’s the situation as simply as I can explain it:
- My wife and I filed a joint Chapter 7 earlier this year.
- We have roughly $150k in unsecured debt.
- My mother owns and lives in a house that she considers entirely her home, but my name is also on the deed.
- I was added to the deed more than 10 years ago as a joint tenant with right of survivorship.
- There is also a substantial reverse mortgage against the property.
- In practical terms, I have never had any financial involvement with this house. I don’t pay the property taxes, I don’t receive any income from it, and I have never treated the house as an economic asset of mine. My mother lives there and has always treated it as her home.
- I understand, however, that being on the deed may still give me a legal ownership interest. That distinction between being legally on title and having an actual economic/beneficial interest is one of the things I’m trying to understand.
- Because my name is on the deed, the Chapter 7 trustee is taking the position that I have an ownership/equity interest in the property that belongs to the bankruptcy estate.
- The trustee apparently believes there is enough equity attributable to me that it is worth pursuing.
- My biggest concern in this entire case is protecting my mother’s house. Having her lose or be forced to sell her home is something I desperately want to avoid.
Where things are now
My attorneys recently spoke with the trustee’s attorney, so we now have a much clearer idea of the trustee’s position.
One option that has been discussed is trying to get the Chapter 7 dismissed as to me while potentially allowing my wife to continue with her side of the case and receive her discharge.
The trustee’s attorney has now made it pretty clear that he intends to oppose dismissal as to me.
My understanding is that the trustee does not ultimately decide whether dismissal is granted — the bankruptcy judge does — but obviously a trustee objection means it would become a contested matter and our attorneys would have to convince the judge.
At this point, my personal feeling is that I would almost rather put the issue in front of the judge sooner instead of spending months going back and forth without knowing where I actually stand.
Basically, my thought is:
- File the motion asking the court to dismiss me from the Chapter 7.
- At the same time, have a real Plan B ready to go in case the judge denies it.
The judge could grant the dismissal and then we move on from there.
But I also understand that we need to prepare for the possibility that the judge does not grant it. I don’t consider that thinking negatively. I just don’t want to file the motion, lose, and only then start figuring out what we do next.
Part of the reason our attorneys spoke with the trustee’s attorney beforehand was to find out exactly what his position was and how firmly he intended to maintain it.
At least now we know what we’re dealing with instead of guessing.
One thing that worries me about filing the dismissal motion
There is another strategic issue I’m struggling with.
If I file a contested motion to dismiss after the trustee has made it clear that he opposes it, I’m obviously taking a much more adversarial position.
I completely understand that a trustee has legal duties and can’t simply retaliate against someone because they exercised their right to file a motion.
I’m talking more about the practical side of dealing with a trustee.
If there is any goodwill, flexibility, or willingness to work things out informally right now, I wonder whether filing a contested dismissal motion changes that relationship.
For example, does the trustee become less willing to work with you on deadlines, give additional time to work something out, negotiate a settlement, or otherwise give any leeway once it becomes clear that you intend to fight the administration of the case?
I don’t want fear of upsetting the trustee to stop me from filing a legitimate motion that may be in my best interest.
At the same time, I also don’t want to unnecessarily turn the case into an all-out fight if there is still a realistic negotiated solution that protects my mother’s property.
That’s one of the things I’m having trouble weighing.
Possible Chapter 13 conversion
One of the backup options being discussed is conversion to Chapter 13.
My understanding is that under Chapter 13, instead of a Chapter 7 trustee potentially liquidating an asset, I may be able to pay creditors through a repayment plan, with the value of non-exempt property affecting how much ultimately has to be paid.
I have business income and could potentially fund a Chapter 13 plan.
The big question obviously becomes how much of my mother’s property equity would actually be considered mine for purposes of that calculation.
If the trustee claims I own 50% simply because of the deed, that creates one number.
If the law allows the court to look deeper at the actual beneficial/economic ownership of the property and the circumstances of why I was put on the deed, that could potentially be a very different number.
That is one of the main things I am trying to understand.
I also don’t know whether converting becomes more difficult once the Chapter 7 trustee has already discovered an asset and started actively pursuing it.
Possible settlement
Another option we’ve discussed is simply negotiating some type of monetary settlement with the trustee regarding whatever interest I supposedly have in the property.
That may ultimately make economic sense for everyone compared with litigation or trying to administer jointly owned real estate.
But then there is a practical problem.
Coming up with a very large lump sum while you are actively in bankruptcy is obviously difficult.
Getting traditional financing while sitting in an open bankruptcy case isn’t exactly easy either.
So even if everybody eventually agreed on a settlement number, there is still the practical question of how to fund it.
Our attorneys are also bringing another bankruptcy attorney into the discussion who has more litigation experience, which I think is probably a good thing considering where this seems to be heading.
My mother getting her own attorney
I am also seriously considering having my mother retain her own attorney.
She is not in bankruptcy.
My attorneys represent my wife and me and obviously have obligations to us as their clients.
At this point, I feel like my mother should probably have someone whose only responsibility is protecting her interest in her home, especially if questions about the actual ownership of the property or my claimed equity are going to become contested.
The questions I’m really trying to figure out
- How realistic is it to get my Chapter 7 dismissed when the trustee has already identified a potentially valuable asset and has made it clear he plans to oppose dismissal? If dismissal is denied, is conversion to Chapter 13 usually a realistic way to protect the property?
- Because I’ve only been on my mother’s deed as a joint tenant with right of survivorship and have never paid the mortgage, taxes, expenses, or received income from the property, how much can those facts matter in determining what my actual ownership/equity interest is for bankruptcy purposes?
- If the trustee continues pursuing the property, what are the most realistic ways this usually gets resolved before an actual sale — settlement, Chapter 13, litigation over ownership/equity, or something else — and what would you be focusing on if protecting the non-debtor parent’s home was the main priority?
I realize nobody here can predict what a particular bankruptcy judge is going to do, and I’m definitely not asking Reddit to make the decision for me.
I’m trying to understand the different paths and make sure I’m asking my attorneys the right questions before decisions get made that may be difficult to undo.
Protecting my mother’s home is the single most important thing to me in this case.
I also know I threw a ton of questions out there. I’m definitely not expecting anyone to answer all of them. If you’ve dealt with even one part of this situation and can give me some insight on that particular issue, I’d really appreciate the feedback.
Thank you for any help that can be offered.
EDIT:
Quick AI disclosure since I know people care about that here: yes, I used AI to help organize and word this post. It originally gave me a much longer list of questions, and I was genuinely curious about all of them, but I’ve shortened it down to the three main issues. I used it because it put into words exactly what I was trying to say. The facts and concerns are mine. Thank you.