Park Ridge, IL asked in Bankruptcy for Illinois

Q: Can my Sister buy a condo and rent it out to me if I am in a Chapter 13 bankruptcy?

Basically, I am going through a divorce and need to move out. Since buying a condo would be cheaper than renting an apartment, my sister has offered to buy a condo and rent it out to me. Would this be allowed if I am currently in a Chapter 13 bankruptcy (without my spouse) or would they look at the purchase and try to claim some type of fraud?


The "secretly funded" is where I struggle. I just don't have the lump sum to give right now. My initial thought is to pay her rent for five years and then she could refinance to add me to title. Would this be okay?

Related Topics:
3 Lawyer Answers
Timothy Denison
Timothy Denison
  • Bankruptcy Lawyer
  • Louisville, KY

A: Your sister can buy anything she wants and rent it to whomever she want.

Lloyd Nolan agrees with this answer

Lloyd  Nolan
Lloyd Nolan
  • Chesterfield, MO
  • Licensed in Illinois

A: As long as this transaction is not secretly funded by you, there is no issue. Your sister is a gem to do this for you.

W. J. Winterstein Jr.
W. J. Winterstein Jr.
  • Bankruptcy Lawyer
  • Boyertown, PA

A: I agree with the prior to answers. The bankruptcy rules and statutes target transactions in which "value", e.g., money's worth, leaves the debtor's estate, not where some benefit is incoming to the estate.

And assuming that you have a 5-year Ch. 13 plan, at the end of which you should receive a general discharge of all debts shown on your Schedules, or the holders of claims have been given notice of your bankruptcy and filed a proof of claim (the discharge may reach claims of creditors not listed in your bankruptcy Schedules if those creditors had notice of your bankruptcy filing, but that usually ends up in more litigation, and it is far better to check your Schedules to list everyone who even just thinks you owed them money, whether you agree with that or not, even if the amount is unliquidated, contingent or disputed).

Just one added note- keep a close eye on developments in your divorce case. Assuming that you were ordered to pay support to the ex, for spousal or child support, those amounts can be changed with a change of circumstances of either party.

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.