Chapter 13: Do You Have To Give Up Your Deceased Parent's Summer Home?
by Veeti Lepisto
If your parent passes away and leaves you a summer home as an inheritance right before you file Chapter 13 bankruptcy, you may wonder if you should add it to your case. The answer is yes. You must report all inheritances you receive within 180 days of filing your case. If you don't report the summer home, a judge can dismiss your bankruptcy. A bankruptcy attorney may help you keep your summer home based on its value and the exemptions in your state and federally.
Can You Keep Your Inherited Property?
Bankruptcy court allows you to keep certain items or assets when you file Chapter 13 if they fall under certain income limits. If your inherited summer home is worth more than your debt, your bankruptcy trustee can use it to pay off your creditors. However, if the home's value is less than your debt, your bankruptcy attorney may ask the court to exempt the property.
State and federal exemptions describe the value of property and assets. Your property and assets must be lower than the state or federal exemptions you claim to keep them. For example, if your summer home holds a value of $12,000 and you owe $15,000 to your creditors, the bankruptcy trustee can sell the home to cover most of the debt.
If your inherited summer home holds a fair market price or equity of $5,000 and your debt is $50,000, the trustee may not consider the property worth the trouble of securing and selling. The overall costs of placing the home up for auction, private sale or some other method may be greater than what it's really worth.
However, the bankruptcy trustee may hold on to the property as security until your Chapter 13 ends. For instance, if you don't pay off your debt on time or lose the ability to pay off your debt, the trustee may then sell the summer home to obtain some type of funding for your creditors.
What Can Your Bankruptcy Attorney Do?
Your bankruptcy attorney may do two things to protect your property. They can have a real estate agent place a value on the home based on the surrounding fair market price of similar homes in the area. The price your loved one paid for the summer in the past may not be the same as it is now.
The home may be worth considerably less than the initial purchase price because the area experiences a lot of foreclosures, crimes and other problems that affect the ability to sale homes. Your attorney may use these potential problems as a way to keep your home during your Chapter 13.
The attorney can also study the federal and state exemptions and use the exemptions that work better for you. Your attorney will discuss the best options with you before filing your case.
If you have concerns about your inherited home, don't hesitate to speak to a professional bankruptcy attorney, like those at Wiesner & Frackowiak, LC, today.
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About Me
Several years ago, one of my best friends married the guy of her dreams. This tall, quiet man adored my friend. Almost every week during their courtship, he presented her with a beautiful, fragrant arrangement of flowers. At the time, my friend’s mom joked that her home resembled a funeral home because of all of the flowers her boyfriend sent her. After the happy pair married, they purchased a new home together and quickly began running out of money, meaning that he could no longer afford to give her the flowers she loved. They even discovered they couldn’t afford to pay the monthly mortgage. After only a few years of marriage, they filed for bankruptcy. On this blog, you will discover the ways a reputable bankruptcy attorney can help you successfully recover from financial ruin.