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home and bankruptcy

my mom has huge credit card debt, we own a home 50/50 with no mortgage, I have told her to put it in my name and declare bankruptcy, she refuses. If she declares bankruptcy, can they take the house?

Posted from: British Columbia

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One Response to “home and bankruptcy”

Barton Goth – Goth & Company Inc. -Trustee in Bankruptcy said...

There is a set amount of equity permitted in a principle residence that fluctuates depending on where in BC you live (Greater Vancouver and Victoria = $ 12,000, the rest of the province = $ 9,000).

If there is more equity than the allowable exemptions then if your mother files bankruptcy her half of the equity would have to be distributed to the creditors. As a result a bankruptcy is likely not the answer given that the house is owned free and clear.

As for transferring her name off the property, this is not a good idea. You are not permitted to transfer property in an attempt to organize your finances to the detriment of your creditors and the Bankruptcy & Insolvency Act is designed to prevent this from taking place.. This transfer would ultimately be reversed if a bankruptcy was filed, the funds would be distributed to the creditors anyway, and then your mother would have committed an offense under the Bankruptcy & Insolvency Act, and likely not be eligible for discharge.