Legal Question in Bankruptcy in Maryland

parents contemplating bankruptcy due to brothers spending

My parents have financed a car and a large loan for my brother to build a house, and he is no longer able to pay for them. There is 2 houses and several cars under my mothers name and she want to know what is going to hapen to the houses if she files for bankrupcy. The house she lives in has a second mortgage on it and she is very worried that she might loose both houses (the second obviously beeing the one my brother and his family lives in). Her payments for her house and car have been on time always, but my brothers home and car loans (under my moms name) have been late for many months now and I am certain the car will be reposessed and the house will have to be forclosed on inorder to pay the credetors. I just want my moms house to be safe. I want to know how we can assure that my mother does not loose her house and car due to the a bankruptcy. What can we do to assure that her property is safe.


Asked on 11/17/04, 10:55 pm

1 Answer from Attorneys
Alan Albin Alan S. Albin, Attorney at Law

Re: parents contemplating bankruptcy due to brothers spending

First, if your mother keeps making the mortgage payments on the house(s), then the mortgage lenders will have no reason to foreclose.

If she stops making payments on the home(s), bankruptcy can delay foreclosure for a little while, but the secured lenders, i.e. mortgage lenders, will be able to apply to lift the bankruptcy stay and proceed with foreclosure proceedings in state court.

To the extent that there is equity in the home(s) in excess of the mortgage balances, this equity would represent an asset of the bankruptcy estate. Your mother would be entitled to statutory exemptions which could protect at least some of the equity in her home, even if she goes through bankruptcy, but again, this assumes that she remains current on the mortgage payments.

This sounds complicated enough that your mother definitely needs to consult an attorney personally in order to decide the best course of action.

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Answered on 11/20/04, 10:02 am


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