Investment property is in 4 names signed as 25% each. One signatory is about to declare bankruptcy. However, this person has never been a financial contributor to the loan. Is there a way for the property to be exempted from action by the bankruptcy tustee? Only legal responses please
If the person filing the bankruptcy is on the loan, he can discharge his responsibility for paying back the loan if he indicates on his bankruptcy paperwork that he intends to surrender the property (I assume he's filing a Ch 7 bankruptcy). This will leave the rest of you responsible for paying the loan (sounds like you've been doing this anyway). As long as the loan payment is made on time every month, there's no problem. If you are behind on the loan payments now or happen to get behind on the loan while the signatory is in bankruptcy, the lender could get permission from the bankruptcy court to proceed with a foreclosure on the property.
So, in other words, make your loan payment in full and on time every month and you should be fine. If you're behind on the loan now, get it caught up before the bankruptcy is filed. If you have problems with the lender accepting the loan payments after the bankruptcy is filed, contact the lender immediately.
