There are some variation in judgment and debt collection laws across
the United States, so it might help to include your father's resident
state.
It seems that the judgment creditor has already collected from your
father's bank accounts, and placed a real estate lien on your house.
Lets examine your father's options.
1) Grant deed the house to you
In this case, the house will still bear the lien, due for the
amount that your father owes your nephew (minus the amount collected
from the bank, of course). If you sell the house some years from now,
the judgment amount probably will be deducted from your share of the
revenue unless you can get the buyer to accept the house with the
outstanding lien. Most buyers, however, will probably insist on the
judgment being paid so that they can get a clear deed. Until the
judgment creditor release the lien, it will remain on the property
regardless of any change in ownership.
Note that some mortage contract includes a "due-on-sale" clause,
which stipulates that the full remaining principal is due is there is
any change in ownership. But even if there is such a thing, your
father's bank might not choose to exercise the option.
2) File for bankruptcy
Filing for bankruptcy will wipe the judgment from your father's
record. However, generally the court will appoint a trustee who will
sell all of your father's non-exempt assets to provide relief to his
creditors. Your father's house probably will also be liquidated, with
your father receiving a certain amount of equity. The amount of exempt
equity varies by state, but it usually is modest.
3) Refinancing
Similar to selling a house, refinancing usually requires a clear
deed. The refinancing process often requires the home owner to pay off
the lien first. This probably is not a viable option.
4) Negotiate with the Judgment Creditor
Might be worth a shot.
5) Appeal the Judgment
I don't know the particulars of your father's lawsuit, but if the
charges were baseless, then your father should appeal. You should be
aware that there is a fixed time interval (length depends on state)
during which your father might file appeal. Make sure to file while
you can.
So, lets recapitulate.
1) Grant deed the house: The lien will remain on the house, to be due
when you sell it later. Furthermore, your father will still be liable
for the judgment, and any assets he acquires later will be fair game
for collection.
2) Bankruptcy: He will not be liable for his judgment anymore. His
assets, most likely including the house, will be sold and the proceeds
distributed to the creditors. He will end up with a small amount of
equity, however.
3) Refiance: Your father will still be liable for the judgment. Not
easy to refiance with outstanding lien on the house.
4) Negotiate with the Judgment Creditor: Worth a shot.
5) Appeal the Judgment: Best bet. Probably hard to find a good lawyer
now that your father's money is gone, though. |
