Sometimes siblings or other family members find themselves the co-owner of property after a relative has passed. Or, maybe you own a business with other individuals. Any time you own a piece of property or a valuable asset with someone, your financial lives become a bit tangled—especially if one of you ends up filing for bankruptcy.
When an individual files for bankruptcy all their property, and Property “Interests”—regardless of who the other owners are—goes into the bankruptcy estate. The purpose of the bankruptcy estate is to protect the assets while the court determines what is exempt, what is not exempt, and what belongs to whom. The property protected by the bankruptcy estate cannot be sold by anyone other than the bankruptcy trustee.
In bankruptcy, only the debtor’s portion of the joint property is taken as part of the bankruptcy estate. However, the trustee can sell the entire asset if it’s not exempt. Then the trustee will pay back the joint owners their share from the proceeds. If a spouse owns the property in question, then the bankruptcy estate will take the entire asset. Washington State is a community property state, and therefore all property is considered owned in whole by both parties. In both cases, you also have the option of buying out the debtor’s share at fair market value if you have the means to do so.
Filing for bankruptcy in essence puts a freeze on any transactions involved with any property owned by the debtor until the person’s debts and ability to pay them in whole or part is sorted out. At best, an exempt asset will survive the process and be returned after the discharge. At worst, the asset will be sold off and you’ll receive only the dollar amount for your share.
Over the past 32 years, the Law Offices of Christopher A. Benson has helped over 2,300 of Washington clients take control of their financial situation. We can stop your garnishment and change your monthly payments for all your combined unsecured debt, and if you have had more than $600 garnished within the last 90 days, we can get all of the money back in most cases. But you have to act quickly–call (253) 815-6940 for your free consultation, or email us today. Evening and weekend appointments available.