Legal Question in Bankruptcy in California

I am about to retire and my income will go down significantly. I have 3 homes in my name: primary, investment (condo) & a home I helped my son buy. My primary and my son's home has 50% equity, but my investment is underwater. The investment has 2 loans (non purchase money refi and a equity loan).

I have no other debts, have a healthy 401k and a small savings. I want to keep my primary and my son's home (purchased as investment, but my son pays all the bills). Can I walk away from the investment property with my 2 homes and all my assets if I foreclose and then file a ch7?


Asked on 1/14/13, 10:34 am

2 Answers from Attorneys
Charles Andersen Charles Andersen, Atty

Law Answers At a minimum you have non exempt equity in your sons residence which could be taken and sold to pay off any deficiency after the foreclosure. Your better off filing under Chapter 13 and attempting to surrender the investment property in full satisfaction of any secured claim.

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Answered on 1/14/13, 10:47 am
Scott Jordan Jordan Law Office

Yes I agree. I would not recommend a foreclosure and a Chapter 7 bankruptcy. You would be putting not only your son's equity at risk but also your own equity at risk.

You state that the investment property is underwater. By how much? Who a sale of the property be enough to entice the 2nd lender to accept the short payoff? What would the tax implication be for s short sale?

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Answered on 1/14/13, 10:57 am


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