Can My Dying Mother Keep Her Home in Bankruptcy?


Dear Steve,

My mom was recently diagnosed with stage 4 liver and colon cancer and was given 2-3 years. She is currently in credit card debt for about 60K. She and my dad are retired and do not get a big paycheck from retirement. They own their home but still have a mortgage on it. There is probably about 60k equity in the home.

Can she claim bankruptcy and still keep her home and car?



Dear Jennifer,

I’m so sorry to hear about your mother’s diagnosis. Over the years I’ve had many clients who were given short times to live and managed to exceed those estimates. I hope you get to spend a lot of quality time with your mother in the near future.

The answer to the question is maybe.

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Much depends on the state in which she lives and the bankruptcy exemptions they follow.

Even if the current exemptions don’t protect the equity, with some prior planning the situation can be modified to make a bankruptcy in six months to eliminate the other debt, a possibility.

I would suggest you and your parents go and meet with a bankruptcy attorney to come up with a plan of action to get this structured for a future bankruptcy.

After getting direct advice from a bankruptcy attorney who is licensed in your state you may decide to retitle the house in just your father’s name, consider a later bankruptcy filing for the unsecured debt.

I look at these situations with a spouse or parent who is facing death more as estate planning than debt avoidance.

Please find a good local bankruptcy attorney and have a free discussion about what bankruptcy would mean for your parents. Bankruptcy is the fastest way to get a fresh start for the least amount of money.

Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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