To care for her elderly mother, she left her city job. Afer her mother died, she was unable to get her job back. She lived off her credit cards, while trying to get work, and made her minimum payments with the little work she did get.

When the minimum payments became unmanageable, she called her parents’ attorney who encouraged her to come to see me for a free interview.

Before too long, I discovered a hidden risk that was staring her in the face, but she did not recognize.

Trying to provide her long-term security, her parents had added her name to the deed of their house.  Now, half-owner of a house with no mortgage, her share of the equity is more than $165,500, the 2016 homestead exemption ceiling in New York City. If she filed for a chapter 7 bankruptcy case, the Bankruptcy Trustee would actually sell the house to pay her credit cards!

If she filed a chapter 13 case to pay off her debts with no interest over 5 years, she would have to pay the creditors in full, because her share of the equity exceeded the amount of her credit-card debt.

Since she could not presently afford a chapter 13 plan, I gave her advice as to how to deal with these issues until she had a steady income that was sufficient to make the time payments to a future Chapter 13 Trustee.

The planning lesson: consider filing for bankruptcy before your name is added to a deed.