A ??? about Chapter 7 in SC**************.

I have a friend who talked with a lawyer today and the lawyer said it would be best to file Chapter 7. The majority of her debt is unsecured, I'd say at least 95% is unsecured. She does however own a mobile home and was told that she could keep it? She has a co-signer and was told that he is entitled to at least 1/2 of the equity in the home, therefore the homestead rule of less than 5,000 went into effect. My ?? is she was told that her co-signer would be protected even after filing 7? She was also told that she could keep a checking account? I thought you would have to close an account out? Thank you**************.

[racer72]

You are allowed to exempt up to $96,000 in assets for a chapter 7 bankruptcy. If the home and any other assets are worth less than the exemption value, there is no reason for any changes. And if she plans to give up the home as part of the bankruptcy, the co-signer should go to the mortgage holder and remove themself from the mortgage contract. This will probably trigger an automatic foreclosure which would happen anyway. Unless the co-signer has been making half to the home payments, he has no claim to any equity in the home. And there are no provisions in the bankruptcy code concerning checking accounts other than the average monthly balance will be listed as an exemption in the bankruptcy.

Racer, she told me that the lawyer told her that in the state of SC that the co-signer is consider a co-owner and is entitled to half of the equity in the home. She wants to keep the home and says that with the co-signer being on the papers that it brings her below the state exemption of 5,000 equity in the home. She was told that she would keep paying on the Mobile home just like she always has as long as the payments remain current. Does this sound right??

[racer72]

What I think the lawyer is doing is giving half of the equity to the co-signer on paper to allow her to file bankruptcy and keep the home. The co-signer still has no claim to any equity unless that person is also investing in the equity. It is a legal way to shield property from the bankruptcy court. The federal government is a co-signer to about a quarter of all home mortgages in this country through FHA and VA lending programs but they do not have any equity in the homes unless the primary lender fails to maintain the payment schedule. Even then the equity reverts back to the lender, not the co-signer.