Any transfer of that type will generally be treated as a Fraudulent transfer by the bankruptcy court. Sorry to tell you that and it is sad. This transfer will likely be disallowed.

Keep in mind that most State have the Homestead exemption which would allow your Mom to have $40K of proceeds form the sale of the home to keep to herself that creditors can not touch. Otherwise I am going to say that her home is probably going to be treated as one of her assets.

Can she borrow against the home at all? Probably not...but if she can just borrow all the equity and have her spend it. Heck go to Vegas and put it all on red 13.... I am joking obviously but you get the drift.

Get a good bankruptcy attorney. Every State is different and this was probably not handled correctly but you need professional advise on this one and fast!

I am sorry for her but glad she is heading to a place where her debts will be gone and stress lower! That is a huge thing. Life is not mortgages and Bills...and heck i know it seems like it is. But those are things that happen and not what life should be about.

My heart goes out to you guys.

regards;

Dirk T Knudsen
ReMax Hall of Fame
#1 Rated ReMax team in Oregon
"The Real Estate Doctor"

Gwyn,

Each state is different and it would be best to consult with a local mortgage broker, Realtor, or real estate attorney. Whether or not the mortgage lien holder can come after the house is dependent on the wording of the loan (is it a non recourse or recourse loan), the bankruptcy laws and judgment, and the manner in which the home was deeded over to you.

CJ