Springfield MA bankruptcy lawyer Jed Berliner discussed the criteria by which a bankruptcy judge may order a debtor’s home sold, when a non debtor has an interest in the home. The balancing of the hardships test under the bankruptcy code is unlikely, however, to protect investment or vacation property owned by the debtor and others.

Joint ownership of anything has its challenges. I have always urged clients about to pool their money to figure out, at the beginning, how they are going to effect a “divorce” of the joint ownership arrangement, when circumstances change.

One of the possible scenarios is the bankruptcy of one owner. The bankruptcy trustee wants to turn the debtor’s assets into cash for the benefit of creditors. The non debtor property owner finds himself faced with either buying the trustee out, on the trustee’s timeline, or suffering his share of the property to be liquidated as well, with whatever tax consequences or loss of future appreciation that entails.

Investors should build this risk of forced sale of property into their financial planning, rather than looking at only the best-case scenario in a business deal.