Advice if Mother with Many Debts Facing Debt Collection

Thank you for your question, Faith. From your question, I can see that you have done extensive research regarding the various options available to assist your mother in resolving these debts. Based on all of the information you have presented, I recommend that your mother retain an experienced bankruptcy and estate law attorney to assist her in finding the best way to resolve the various financial problems she is experiencing. Given her limited income, and the fact that her home is her only substantial asset, I think that she should be able to find a workable solution to her financial troubles.

Your mother may not be able to file for Chapter 7 bankruptcy due to the value of her home, which significantly exceeds the homestead exemption allowed by the State of Virginia. However, a Chapter 13 bankruptcy may be a workable solution to her financial difficulties. Chapter 13 bankruptcy generally allows homeowners to keep their home and other assets while making payments toward their debts under the supervision of the bankruptcy court. Most Chapter 13 plans last either until all debts included in the plan, or for five year; if a debtor’s income is insufficient to pay all debts within five years, any debt remaining is usually discharged by the court. In your mother’s case, it is possible that, due to her limited income, her Chapter 13 payments would likely be minimal, meaning that she would probably pay only a small percentage of her overall debt. To learn more about the various types of bankruptcy available to consumers, including Chapter 13 bankruptcy, I encourage you to visit the Bills.com  bankruptcy page.

Given the complexity of your mother’s financial situation, I encourage you to consult with an experienced bankruptcy attorney as soon as possible. A good attorney should be able to tell your mother if bankruptcy is a viable option for her, and what other steps she should take to protect her assets. For example, you may wish to ask the attorney about the possibility of placing your mother’s home in a living trust once the lien created by the large judgment is resolved. As for your concern about the bankruptcy court viewing any transfer of your mother’s home as a fraudulent conveyance, I cannot imagine that any bankruptcy trustee would challenge the transfer of a 76 year old woman’s home. Again, discuss these issues with your attorney so you and your mother can find a workable solution to her financial difficulties.

I wish your mother the best of luck

I hope that the information I have provided helps her Find. Learn. Save.

Best,

Bill

bills.com