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Assets Owned Prior to Bankruptcy


mom2004
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My brother receives a disability check around $650 month. Two years ago, he was in desperate need of a house and bought a mobile home. He had some other relatives living with him at the time. The crooked salesmen changed the income on the application to get the loan approved. Now, my brother is stuck with a $500 house payment and the relatives have moved out. (The relatives were basically the ones paying the house payment.) My brother has a few small charge account bills too with stores. I told him he might as well file bankruptcy and let the house go back and I will help him find housing he can afford. The mobile home cannot be sold because it is extremely over priced because another house was traded in on it.

My brother had saved up nearly $3K for an emergency fund. If he files bankruptcy, will the Trustees take this money to pay creditors? Also, he has a 1994 car that is paid off. Can the trustee force him to sell this also? BTW, my brother lives in Georgia.

He is worried about filing because of the way he obtained the house with the crooked salesmen changing the income on his credit application. He has always had A1 credit and they just took advantage of him to make a huge commission to put in their pockets.

Sorry for the long story. Any thoughts?

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#1 Yes the trustee will take the savings

#2 No they will not force the sale of the car.

#3 He need not worry about the loan app. That issue will never be brought up.

It is unlikely that he will be able to find someone to move in with him to help pay the mortgage. So, he will just lose the money in his savings account because he also can't give the money to anyone else to hold for him before he files bankruptcy. Is that correct? What if he gave the money to someone at least two months before filing bankruptcy?

It appears that it is a bad situation to file bankruptcy if you have more than $200 or $300 on hand.

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Your brother needs to consult with a BK attorney or 2.

What he gets to keep, including cash, all depends on the exemptions for his state. GA exemptions are here:

http://www.thebankruptcysite.com/exemptions/georgia.htm

He MAY be able to use part of the hometead exemption (unused portion can be use for ANY property) to keep the cash.

Draining that much cash in 2 or 3 months would look suspicious, and he'd have to have receipts to show where it went. If it wasnt for necessities, he could be in hot water with a Trustee.

On the other hand, if he bought a better car with it, that is done all the time pre-bankruptcy.

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Here's an update on my brother's situation: My brother spoke to an attorney this morning. He was informed that since he has not paid on the house long enough to build any equity in it, he could apply that toward the other exemptions. (Georgia has a $5,000 Homestead exemption so the unused portion of homestead may be applied to any property. I read this on the bankruptcysite.com website. )

In other words, he could keep his car and the money in his checking account--nearly $3K. BTW. It's probably around $20K negative equity in the house. It's two years old. (This is another reason not to invest in a mobile home, because they depreciate so quickly.)

Thanks again to everyone who responded.

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