Legal Question in Bankruptcy in Missouri

Re: Will I lose my home?

Short answer -- in Missouri you are only entitled to keep $8,000 in home equity.

In your particular situation you probably have some "wiggle" room. The fundamental principles of the "bankruptcy estate" are key to an answer to your question. The house is technically property subject to the realm of bankruptcy ("bankruptcy estate") and the power of the bankruptcy trustee. But there are issues with respect to title and third parties (your parents) with regard to the collateral (house).

The Trustee under these circumstances may abandon the property of the bankruptcy estate under Section 554(a). I presume from your question the house is paid off. But is the equity really that high? The Trustee has broad discretion to abandon property of the bankruptcy estate especially since a partition and sale would be sticky and the end result would only net $10,000 to $12,000 (20K minus the 8K that is exempt).

The alternative would be to file your case under Ch. 13 and offer to repay a portion of your debts over 3 to 5 years. My experience tells me that the Ch. 13 Trustee would let you keep the property if you were paying back a high percentage of your debts (50% to 100%).

Also, there are ways to sell non-exempt assets and convert them into exempt assets. This is referred to as pre-petition planning. It is akin to tax planning. Please feel free to contact me personally to discuss this situation in greater detail. ph. (800) 303-0720