bankruptcy but name is on title to a rental property

Posted on Tuesday, November 18, 2008

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Hello

I am in the middle of a separation from my common-law who I have been with for four years.

I used to have perfect credit and now I am in a position where I can only the minimum amount that is due. Now I think I need to file a bankruptcy. I have very limited income, am a single mother, and after this separation won`t be able to afford my debts and my living costs.

My ex is helping me out until I can get on my feet again but he isn`t going to do that for very much longer. Now my creditors are calling constantly and I need to do something.

The problem is that both me and my ex are listed on title to a townhouse which we rent out. We tried to sell the property but found that there is a lot of work that needs to be done before we are allowed to sell it. This is likely going to cost about 12k which we don`t have. We did have a number of offers that came but as soon as the inspections were done no one will touch the house and there is not enough equity in the house to cover the cost of the mortgage if we reduce3 the price anymore. Should I just take my name off the townhouse, let my ex keep it and simplify my life? Would this make things easier or would it cause us problems?

Thanks in advance!

Filed under: Bankruptcy
 posted by Questions @ 5:38 am
1 Expert Comment:

 At November 28, 2008 | 8:25 am , Barton Goth, Trustee in Bankruptcy Said...

Simply removing your name from the title of this property will actually end up causing more problems in the long run as to many people it would appear as if you are trying to defeat the rights of your creditors. If there is no equity in the property, there really is no major impact on the property if you file a bankruptcy, so leave things as they sit, meet with a trustee, explain all the details surrounding the property and I think you will find it won’t really change anything.

The only other consideration is if you can’t afford to keep the property and you are going to have to sell it at a loss, you would be better to do this before you file for bankruptcy as the shortfall (difference between the sales price and the amount you owe on the property) will then be cleared along with the rest of your debts.

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