Mom with dementia needs to sell underwater house in MN, but there are cc/loan court judgements against her. I need advice! Hi, my mom was abused by my deceased father for 40 plus years. As an escape she became an addicted gambler, racking up 20 plus credit cards, a loan against her investments, a loan against her life ins. policy, and a second mortgage. She worked 7 days a week until into her late 60s to keep up with minimum payments and gamble. In 2007, she was injured and placed on disability and had to stop working. At this point I, an only child, took over her finances for her and tried to get her help. She gambled her entire retirement away and sold off all of her assets to gamble. Basically at this point, she only had social security coming in, and was able to keep up with her house payments. She did not claim bankruptcy. My father passed away in 2011. She is getting about $2300 a month in SS. She survived okay keeping creditors at bay. She was recently diagnosed with Dementia and Parkinsonism, and she eventually will have to leave this falling down house that is totally underwater. I have full POA and have to make all these decisions for her. There are multiple court judgments against her that I am told will come into play when she tries to sell the house. I had a realtor look at the house, and there is a chance that she would get enough money out of the sale to pay off her mortgage and fees and pay me back for a bankruptcy that I am assuming would have to be done prior to putting the house on the market. I have a county Medicaid MN choices assessment set up for my mom, but I believe she makes too much in SS to qualify for this, but there may be some help she can get if she qualifies for "Alternative Care". My big questions at this point are, how do I sift through all the paperwork concerning her debt to see if any is tied to the sale of the house that wouldn't be erased with a chapter 7 bankruptcy? If she claims bankruptcy, will it be hard for us to find a senior apartment for her near me? If she ends up foreclosing on her house, will it be even harder for us to get her into a new living situation? We are willing to cosign on a lease, but can't show $1000 of disposable income to put towards an apartment. Like I said, she has $2300 from SS each month. I am thankful for any advice, it is a tragic and complicated situation. I am also looking into getting free law help for her. I do not have the funds to pay for a lawyer for her. Thanks.

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Check with your local council on aging for free/reduced legal advice. Right now all you need is to know which way to go. An apartment may just be a band-aid with more problems down the road, so an evaluation is critical. A good realtor can handle the sale, liens included. The credit card debt can be written off--no need for bankruptcy if her only income is SS. That's my 2 cents, but I'm not an attorney, so I'd want some legal advice and that evaluation before doing anything. If she's headed for SNF within 5 years, you want everything in perfect order for Medicaid.
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P.S. You raised the issue of 10 year old judgments and whether liens arose from them, i.e., whether judgments were recorded against the real estate and became liens. This I don't know, nor do I know your state. The issue might vary by state. This is yet something else you'll need to research.
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1. If you haven't researched Ch. 7 filings, you might want to start here for the basics: If part of the URL is deleted, search for Ch. 7 bankruptcies and scroll down till you find the article by the US Courts. Law firms sometimes publish "basic" on their websites that are brought up in google searches.

In order to determine what debts might or might not be discharged, you'll have to find out which of your mother's debts are in those categories, and then determine which ones might not be discharged.

This is NOT my area of expertise, but I do recall some rumblings toward the end of the real estate crisis that changes were considered to the bankruptcy laws to address credit card debt. I didn't follow up and don't know the status of credit card debt being discharged in a Ch. 7 proceeding; a bankruptcy attorney would though.

If you need assistance on the research, go to the county bar association library and ask for help.

2. You'll need to search local county records to determine what liens and/or judgments have been recorded against her house. Given the possibility of more than one, I would suggest that you hire an attorney to order a "foreclosure search". Or ask the foreclosure attorney you hire.

This is definitely not a task for an elder attorney. Bankruptcy proceedings are very specific, and an elder attorney would be out of his or her league on this.

If you need some guidance on finding a bankruptcy attorney, just post back. (my post is going to be long enough w/o adding too much advice!)

A foreclosure search is different from one done when someone is buying or selling a house. It identifies anyone who has an interest that must be extinguished before the property is sold. This would provide a thorough list of who has judgments against the property.

3. Someone pays the bankruptcy attorney; creditors don't get that money. A Ch. 7 extinguishes debts (but see No. 1 above). I don't believe that creditors can attach the bankruptcy attorney's fees.

4. What might be an issue is selling the house to satisfy the debts, if there are insufficient funds in assets to do so. Don't be surprised if a bankruptcy attorney recommends this. If so, this might a time to bring in an elder law attorney for the issue of discharge of debts through Ch. 7 and reserving the house sale proceeds for care.

5. With a few creditors, there's also the issue of priority, i.e., who holds the first liens, second, and more subordinate liens. Some of the lower lien holders might not get anything from non real estate assets, so the house may come into play.

6. The Michigan State Bar Assn. used to hold specific practice area updates. I attended the real estate ones and don't recall if there were any on bankruptcy. Check with your local county bar association, or one in a large county, as well as the state bar association, and ask if there are any seminars on Ch. 7 bankruptcies. Some of this might be more technical than you want, as the assumption would be that attendees are in the legal profession. But you might be able to get some good information.

In Michigan, the ICLE (Institute for Continuing Education) also used to hold seminars, but this was years ago and they were expensive, well beyond my reach even when I was working. It would hurt to check out "", its website.

7. Years ago I needed to do some research when the Internet was in its infancy. I found that Nolo Publishing has easy to understand and reliable advice. You might check its website for any Ch. 7 manuals.

You have a somewhat daunting task ahead of you. Don't let it overwhelm you, as it very well could.
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Hi, thank you for your post. Basically if we can sell the house, she would probably be able to pay off the mortgage, and me if I had to front her the money for a bankruptcy (unless the creditors would get that money). I doubt that should would make any profit on it. I am going to go the the county courthouse soon and see if there are any liens against the house from the judgements. There are 3 judgements against her, one is over 10 years old, one will be 10 years old in February, and the other one will be 10 years old in 1/19. I was told that a judgment is not valid if it is 10 years old, and I don't know if any of these judgements include liens. If there is any extra money from the sale of the house, I don't know if it would be fair game to creditors if she claims bankruptcy or not. I don't know if my mom is competent enough to stand before a judge. The situation is so complicated now, it's hard for me to keep it straight, much less her. I think she could answer simple questions correctly, but would not be able to answer a lot questions about her debt because she would not remember. We are taking it week by week-her being alone in the house. My hope is that she can make it through the winter and doesn't decline mentally, lose more dexterity in her hands, or fall. I'm trying to get all the answers I can so I am ready to change her living situation when she needs it. She is able to bathe, do light cleaning, use the microwave, things like that, but she needs to be prompted to eat (she claims she isn't hungry) and she has been losing weight. She gets $2350 in SS per month after her Medicare payment, and has 2 secondary health ins policies that cover everything except prescriptions 100%. She has no other income, and has in the past sold all of her valuables to gamble the money away. After mortgage, bills and groceries, she has about $300 per month extra. I do not feel that this would be enough to pay for services in her home if she declines a lot. I have not paid for anything for her, I love her to pieces, but she made her mistakes, I can't jeopardize my family's future because of it, and she would not want that. She lives alone in the house I grew up in, which is 1 hour away from me, and it is falling apart, roof leaking, water in basement, etc. My husband and I have tried our best to cheaply deal with emergencies but we can only do so much. I would love it if I could get her into an apartment close to me and have services come in and help her. I scheduled an appointment with the county for a MN Choices Assessment, which will hopefully answer a lot of questions about what she qualifies for and all the what ifs. It is such a waiting game for answers, it's hard to be so patient, I'm trying to get as much free info as I can to make informed decisions. At the end of the day she could move in with us if she has nowhere to go, but she wouldn't want that and it would be hard on us too. Thanks so much, I appreciate all ideas and advice.
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Also you mentioned house is underwater and then later write that there may be $ to mom from sale of the house. How is it able to be both?

Ambrosia salad of a mess. Your answers will help sort out the pieces.....
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So many things.... I have a couple of ?’s:
-is mom competent enough to deal with going to a courthouse and answering ?before a judge?
-if need be, could mom live in her home for another 2 or 3 months on her own, solo OR is she at the point of needing 24/7 oversight?
- so every mo she is paid $2300 from SS, right? Any other income?
- have you personally paid for “mom” things?
& do you & mom live together or you have your own house?
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