Note Maker Declaring BK, what to do? - Posted by JeffB (MI)

Posted by Fred-MI on March 31, 2006 at 22:38:44:

A lot depends upon wheather the filing is for federal or state bankruptcy protection. No state has been mentioned, but they are all different. Under federal bk, your home is protected up to a certain dollar amount, i think around $16k.
you will want to find out if the filing is state or federal, and if federal, which chapter.
There are several books on the market that purport to help a person thru BK. It may benefit you to buy one, which has the latest federal changes in it. It may not tell all, but will definately be cheaper than having an atty explain it all from square one.
Good luck

Note Maker Declaring BK, what to do? - Posted by JeffB (MI)

Posted by JeffB (MI) on March 31, 2006 at 15:59:15:

I have a customer who bought a home from me last year who is preparing to file BK due to unexplainable (her words) credit card debt. She has paid on time so far and wants to keep the trailer. Both her and her husband signed for the loan, and only she will be filing for BK.

She asked me to send her an authorization letter to allow the DMV to remove her name from the title (leaving only her husband’s name). I have no problem with this since she will remain liable for the loan. But my question is, is this really necessary since a personal residence is protected under BK anyway? In case it matters, she owes me more than the home is worth so there would be no equity to go after, anyhow.

Re: Note Maker Declaring BK, what to do? - Posted by Evan

Posted by Evan on April 02, 2006 at 20:40:14:

Got the following info from:


Bankruptcy in the United States is a matter placed under Federal jurisdiction by the United States Constitution (in Article 1, Section 8), which allows Congress to enact “uniform laws on the subject of Bankruptcy throughout the United States.” Its implementation, however, is found in statute law. The relevant statutes are incorporated within the Bankruptcy Code, located at Title 11 of the United States Code, and amplified by state law in the many places where Federal law either fails to speak or defers expressly to state law.

While bankruptcy cases are always filed in United States bankruptcy court (an adjunct to the U.S. District Courts), bankruptcy cases, particularly with respect to the validity of claims and exemptions, are often highly dependent upon State law. State law therefore plays a major role in many bankruptcy cases, and it is often quite unwise to generalize bankruptcy issues across state lines."

As the others have said, “…it depends” on the state of the residence. Bottom line…highly recommend checking with your attorney. Also, might get some advise from the legal minds on the RE law board.

Good luck,



Re: Note Maker Declaring BK, what to do? - Posted by Tony Colella

Posted by Tony Colella on March 31, 2006 at 16:36:46:

I am by no means an authority on BK’s especially with more recent law changes but I will post a few things that I have read in passing that may point you in the right direction.

Although this does not seem to be the case for you, we often here buyers mention they are considering filing BK but few follow through with it (in my experience).

It is my understanding that those that do, must include the mobile home in the BK for it to become an issue for you.

I also believe that there are rules precluding them from including the home in the filing and remaining living in it (but I cannot confirm this).

Last. If they do include the home, then you would have to deal directly with the trustee and not the tenant. You would eneavor to document and convince them that the home has no equity and that you will discharge the debt if they will return the home to your possession. It is up to them to ensure that you are not escaping with equity that could be used to pay off other creditors.