My mother-in-law is considering filing chapter 7 for her small business. She has about $100,000 debt. Her only asset is a house that she and my wife bought as joint-tenant worth about $700,000 with about $200,000 left on mortgage.
From our understanding that if she is the sole owner of the house, during chapter 7 she will be forced to sell the house to repay the debt, the only way to keep the house is to have enough debt that even selling the house (minus the fees and etc) still would not cover the debt.
As my wife is a co-owner for the house, when my MIL file for chapter 7, will her share of the house be $700,000/2=$350,000? Which after the homestead rule, fees and etc, she might have more debt than the amount thus won't be forced to sell the house?
This is in California for state law purposes.