Chapter 13 Can Save Inherited Home Even Before Deeded to Heir

by | Aug 10, 2023 | Chapter 13, Foreclosure |

Can chapter 13 be used to save an inherited home from foreclosure when the deed has not yet been transferred? The answer is yes. Section 541 of the Bankruptcy Code is entitled, “Property of the estate”  Included in the definition of property of the estate is “all legal or equitable interests of the debtor in property as of the commencement of the case”. If you were to buy a home a deed to the property is put in the buyers name. That person has legal (and as we shall see, equitable) title to the property. But let’s say the home was owned by a parent, in say, Cherry Hill New Jersey. In their will they indicate you are the Executor of the will and you are to receive title. However, you have been busy and have not gotten around to transferring the title. You then learn that your parent was behind with the mortgage and there is a foreclosure pending. Can you file a chapter 13 to stop the sheriff sale and pay the arrears over time. You can because you have an equitable interest in the property. What that means is that even though you do not have “legal” title since the deed is not in your name, you have “equitable” title because in reality you are the true owner, the deed just has not been transferred yet. And because the bankruptcy court has an interest in the property since you own it, the sheriff sale can be stopped and the lender must accept the arrears over time.


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