A recent Jacksonville case allowed a debtor to pay for a mortgage in his sister’s name on a house in which he had a 50% ownership interest. As long as the debtor has a legitimate ownership interest in the property, the debtor can pay any lien on the property (including any arrears on that lien) in a Chapter 13 repayment plan.
This case occurred when a sister executed a mortgage on her home, transferred that home to her mother only to have the mother die shortly thereafter. Because the mother died intestate, the ownership in the house was then split amount her ten children evenly. One son wanted to live in the home and because the sister had not paid on the mortgage in some time, four of the other siblings transferred their interest in the house to that son. He then had a 50% interest on a home that was now facing foreclosure. In an effort to cure his sister’s arrearage no the mortgage, he filed a Chapter 13 case and submitted a payment plan that included his sister’s mortgage.
The sister, for unknown reasons, filed an objection to her brother paying off her mortgage. She argued that because the mortgage was not in his name, he could not pay it. Interpreting the bankruptcy code, the Judge ruled that the debtor had the ability to pay on any lien encumbering property in which the debtor had an interest. As a result, the son was able to pay his sister’s mortgage through a Chapter 13 case.
Admittedly, these are unusual facts, but the letter of the law could be applied to any similar facts that include some property in one person’s name and a lien on that property in someone else’s.
If you have questions about a unique financial situation, please contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.