Legal Question in Bankruptcy in Michigan
My father is considering bankruptcy. Here is some background info:
Age: 62
Job: Unemployed
Marital Status: Married (wife just filed for Divorce though)
Outstanding Debt:
� Doctor Bills: 5,000
� Credit Bills: 60,000
� Mortgage: 110,000
Assets:
� Home: 40,000 to 80,000 in equity
� Car: 2,000
Other info:
� Wife is Disabled
� Wife just filed for divorce (she was tired of being poor�.)
� Much of the credit card debt was due to wife�s illness and needing to take on additional debt to pay for medical insurance, etc.
� He cannot afford his home and has borrowed about 20k from family members in the last 2/3 years to pay his bills (this is not included in the above mentioned debt).
Questions:
Should he sell the house now given the situation with the divorce or will it reflect poorly with a potential bankruptcy filing?
2 Answers from Attorneys
His discharge may be denied if he transfers property for the purpose of hindering, delaying or defrauding creditors or a future bankruptcy trustee. The sale of the house may be one strategy for the restructuring of his finances, especially considering that he cannot afford it. But what would he do with the equity he receives in cash upon its sale? It may be easier to exempt the value by filing before the house is sold. He should consult with a bankruptcy attorney to review all of his options.
This answer is not legal advice and is for discussion purposes only.
Nothing should be sold prior to filing bankruptcy as the asset especially real estate may be exempted as a residence rather than accounting for it as cash.
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