Q: Long story short: parents upside down on bills; likely to lose their house to foreclosure. No where to go. No money.
My parents are 80. My mother has Alzheimer's. Obviously I don't want them to be homeless. There is no family money and their lending agency (Bank of America). Can they declare bankruptcy and keep their home?
A: A chapter 13 bankruptcy proceeding is designed to enable debtors to keep their houses. There are debt maximum limits, however, and a Chapter 13 debtor must be receiving "periodic income" with which to fund a plan. Social security payments qualify as periodic income, if sufficient in amount to fund a plan to cure mortgage arrears, over and above necessary living expenses. Once a bankruptcy is filed, the arrearage amount ceases to earn interest.
Other key facts not stated in the question- is there equity value in the home? Are the other debts joint obligations of the parents? While PA state law allows a tenancy by entirety exemption of property, it does not protect the home where the debt, e.g., credit card debt, is substantially jointly owed by both home owners.
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