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Parents going bankrupt, is there anything I can do to save their assets? (pun not intended...)

Boca Raton, FL |

My father and mother are probably going to have to file for bankruptcy (ch. 7). All 3 of us are Florida residents and have been for over 15 years. They are currently upside down on their mortgage (the house is in both their names) and have stopped paying it. My dad owns some land in New York, I believe this is owned free and clear. He also has 2 parcels of land in Florida. One is a small lot and the other is an estate, he owes money on both. The money owed on the estate is not a mortgage. I am pretty sure the land is all only in my fathers name, perhaps with the exception of the NY one.

Ok so I want to know what I can do to help them save these assets. Please know that I am only 21 and still attending college and I rely heavily on financial aid so I don't want a lot of assets in my name.

I know that my parents cannot directly sell/gift or whatever to me because that would look bad for the bankruptcy. So I was thinking, if I form an LLC, which I was going to anyways, will they be able to sell or gift the assets to the LLC? Will the mortgage/liens/loans/etc transfer to the LLC?

Or does anyone have any other suggestions? Assuming that we have no other American citizens that we can sell the land to.

Also, my car and my mothers SUV are paid off (both in father's name), what can they do about these, as Florida law only exempts 1k on vehicles.

Thanks for the help guys. Sorry about how erratic my typing is, its my first time posting something like this, and I dont have many details cause of course my parents dont want me to know how bad things r for them.

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Attorney answers 3


It is great that you are trying to do what you can to help your parents... ! Given the situation you describe, bankruptcy would not seem to be a strategy that would make sense currently for many reasons.

If the issue that is causing you and they to consider bankruptcy is the situation with the house, there are probably better alternatives. If there are other things going on, you have not said anything about what those are, so it is difficult to respond to whatever issues there may be.

If your parents dispose of any assets for less than market value, to any person or entity. those dispositions are subject to unwinding by the bankrutpcy trustee. Furthermore, if it was done in contemplation of bankrutcy, that can be deemed fraudulent, with a substantial risk of serious penalties.

The assets that are at potential risk in bankruptcy are those that have equity - meaning that the value of the items exceeds the bona fide secured debt. It is to that equity that the assets are to be applied. In Florida, the one generous exemption is in equity in homestead real estate, which can in some cases be in an unlimited amount. However, from your description, your parents homestead real estate has no equity. Other exemptions are quite limited, so if there is equity in vehicles, other real estate, bank accounts, stock, bonds, jewelry, household contents, etc. etc.

If I knew all the details, I may well have specific suggestions. It is impossible to learn enough on an internet web site to be able to do that, and besides, your parents' situation should not be discussed in detail on the open internet. I have an office in Boca Raton, and frequently assist people with mortgage problems. There are details and contact information on my web site, - or feel free to email me at


I think Ms. Golant gave an excellent answer. I just wanted to add that any transfer of assets regardless of who to can look bad. I think it's very important that you consult with an attorney about this that is knowledgeable about bankruptcy and alternatives to bankruptcy.


The previous answers are correct - bankruptcy may NOT be the solution to this problem, especially if the only debt that's causing trouble is from the two real estate loans. A better option may be to have an experienced attorney look at the real estate loans and figure out how to avoid foreclosure on those.

If you'd like to learn more about how and why to defend foreclosure instead of going into bankruptcy, check out our free 30-page ebook: