What if I bought a house before BK?

[swampwiz]

I realize that I have had the most interesting story in a while (by far!), but here is another tack - something which may work out for in the end.

All I have to do to satisfy the terms of the agreement I had when I got my Katrina grant is to buy a residence in Louisiana (any residence, no matter how cheap, so long as it would have a vaild certificate of occupancy), and hold onto it for 3 years past the time I got the grant (which would be October 2011.) If I were to go through bankruptcy in which case the court forced me to liquidate the property, then I would off the hook for having to occupy the house at that 3 year period. Of course, it would be free rent. , and I would be able to get the homestead exemption of $35K when I would be cast out into the street. I could even have my piano delivered (musical instruments are exempt) and enjoy it until I would sell it after it would clear bankruptcy (or maybe if I get could actually get the full homestead exemption, I might be able to keep it and store it until I could move into someplace to play it again. )

I have the current homesite worth about $40K and the $23K of the remainder of the grant. I could do a deal in which I would buy a home contingent on the sale of my homesite.

I guess the only question is if it would be legal for me, as someone who now definitely considers himself "insolvent" to buy a replacement home. I would think that a place to live (especially a very modest place) would be considered a "necessity" - especially a place that I am contractually obligated to buy!

Any thoughts?

[DeadManCrawling]

You are full of ideas! Not all bad, I must say, but you are, alas, in the wrong state.

If you pulled this scheme in Florida, your residence would be automatically protected up to 125k, even if you were a brand new resident. Had you lived here two years, you could dump 100 million into a mansion and enjoy total homestead protections.

Louisiana I am unfamiliar with, but good luck.

I hope you don't end up playing that piano in the street after a sheriff sale.

[swampwiz]

You are full of ideas! Not all bad, I must say, but you are, alas, in the wrong state.

If you pulled this scheme in Florida, your residence would be automatically protected up to 125k, even if you were a brand new resident. Had you lived here two years, you could dump 100 million into a mansion and enjoy total homestead protections.

Louisiana I am unfamiliar with, but good luck.

I hope you don't end up playing that piano in the street after a sheriff sale.

But I am a legal resident of Louisiana, simply still displaced from the disaster, and I would merely be finally buying the replacement home that I was supposed to be buying all along (albeit a lot more modest that I had hoped! ) I would think that future Republican governor Bobby Jindal would want to make sure that my case would be covered.

[hereforinfo]

If I were to go through bankruptcy in which case the court forced me to liquidate the property, then I would off the hook for having to occupy the house at that 3 year period.

You sure about that?

[swampwiz]

You sure about that?

Absolutely! I talked with the lawyer for the state about it. And in the short initial discussion I've had with my attorney, he concurred.

[pookieny]

If I didn't know any better, I would swear it was the return of debtmonster.

[hereforinfo]

Here's an idea. Why don't you use the $23k to pay cash for an old single or doublewide trailer and put it on the lot, live there with no rent at least until the 3 years is up. Then you will have no mortgage and won't have to worry about owing the grant back to the state. Get that $25/hour job to pay the rest of your bills, and if/when you find a job with a higher salary you may be able to afford a mortgage to build a house.

[whipster1]

"I realize that I have had the most interesting story in a while"

You are a legend in your own mind.

[ForumReader]

If I didn't know any better, I would swear it was the return of debtmonster.

Debtmonster, hmm oh yeahh, didn't he enjoy talking about cars and car deals? This one, I can't put my finger to it, but there is something about his/her/it posts....could be Debtmonster, but I think it is someone else.

[swampwiz]

Here's an idea. Why don't you use the $23k to pay cash for an old single or doublewide trailer and put it on the lot, live there with no rent at least until the 3 years is up. Then you will have no mortgage and won't have to worry about owing the grant back to the state. Get that $25/hour job to pay the rest of your bills, and if/when you find a job with a higher salary you may be able to afford a mortgage to build a house.

That's basically the idea, but I will add in the homesite that I would be selling at the same time. I can't put a double wide there because of subdivision restrictions.

Rather than pay those bills, I will go the route of Chapter 7. I'm probably looking at wiping out an extra $90K if I go through Chapter 7 rather than Chapter 13. As for a house, I could almost not care less, as I have developed a very mobile lifestyle - it was only because of the rock bottom interest rate and availability of the super grant that made me realize that building the house would actually make me money in the long run, so even if I only lived there for a few months a year, it would be worth it to me.

Now a decent condo on the Western side of Denver would be great (quicker to get to the mountains ) After the BK, I will probably take whatever cash I have and look to augment it with decent jobs, and when I have enough to buy that condo, I'm going to get it, and move all my stuff into it. Perhaps if I could find a cheap enough place in Louisiana that could survive the exemption, I might even do that, just to have a place there.

[backtoschool]

That's basically the idea, but I will add in the homesite that I would be selling at the same time. I can't put a double wide there because of subdivision restrictions.

Rather than pay those bills, I will go the route of Chapter 7. I'm probably looking at wiping out an extra $90K if I go through Chapter 7 rather than Chapter 13. As for a house, I could almost not care less, as I have developed a very mobile lifestyle - it was only because of the rock bottom interest rate and availability of the super grant that made me realize that building the house would actually make me money in the long run, so even if I only lived there for a few months a year, it would be worth it to me.

Now a decent condo on the Western side of Denver would be great (quicker to get to the mountains ) After the BK, I will probably take whatever cash I have and look to augment it with decent jobs, and when I have enough to buy that condo, I'm going to get it, and move all my stuff into it. Perhaps if I could find a cheap enough place in Louisiana that could survive the exemption, I might even do that, just to have a place there.

I thought you said you were going to retire to Eastern Europe and engage in "international arbitrage" with your 401k.

[swampwiz]

I thought you said you were going to retire to Eastern Europe and engage in "international arbitrage" with your 401k.

Well, I would like to be back in Louisiana for football season, in Colorado or some other ski area for the winter, and Eastern Europe for the remainder, especially the summer. Actually, now that I have thought of this ploy, I think I may actually want to stay in the house. I just need to find a house cheap enough that I could keep - and that would be worth keeping!

My ideal home would basically be like a giant efficiency - 700 ft^2 or so, with a man's kitchen (big fridge, a sink and a few feet of counter space) and one bath. I could even do without a laundromat at first, but I would need to get one eventually. I could survive with a window unit, but I would eventually put in a nice modern, efficient heat pump with the tax credit.

I guess I could do a fixer upper, but I would make sure not to do too much fixing until the BK would be final.

[swampwiz]

OK, I resisted the temptation to start another thread, and used an existing one.

What if I bought a home in my name with a small mortgage that I could qualify on my own post-BK because I would have shown enough income in the 6 months, that was cosigned by a relative?

I've been looking around Louisiana real estate, and I think there could be a nice country hamlet that would work for me in the $60's. Perhaps I could get a mortgage with (exactly) $35K down, and finance the rest (using my FICO score of 733 and the cosigner's equally high score, but choosing to not disclose my income - or just admitting that with the downslide in the market, my income is negative, etc.) I would then be free to spend down the grant since I would be fulfilling my obligation (there is no rule that say that you can't use the grant and put it in your pocket so long as you are there at that 3 year point.)

[backtoschool]

Well, I would like to be back in Louisiana for football season, in Colorado or some other ski area for the winter, and Eastern Europe for the remainder, especially the summer. Actually, now that I have thought of this ploy, I think I may actually want to stay in the house. I just need to find a house cheap enough that I could keep - and that would be worth keeping!

My ideal home would basically be like a giant efficiency - 700 ft^2 or so, with a man's kitchen (big fridge, a sink and a few feet of counter space) and one bath. I could even do without a laundromat at first, but I would need to get one eventually. I could survive with a window unit, but I would eventually put in a nice modern, efficient heat pump with the tax credit.

I guess I could do a fixer upper, but I would make sure not to do too much fixing until the BK would be final.

Personally, I think that in this economy you will be able to find a house like that.

[backtoschool]

OK, I resisted the temptation to start another thread, and used an existing one.

What if I bought a home in my name with a small mortgage that I could qualify on my own post-BK because I would have shown enough income in the 6 months, that was cosigned by a relative?

I've been looking around Louisiana real estate, and I think there could be a nice country hamlet that would work for me in the $60's. Perhaps I could get a mortgage with (exactly) $35K down, and finance the rest (using my FICO score of 733 and the cosigner's equally high score, but choosing to not disclose my income - or just admitting that with the downslide in the market, my income is negative, etc.) I would then be free to spend down the grant since I would be fulfilling my obligation (there is no rule that say that you can't use the grant and put it in your pocket so long as you are there at that 3 year point.)

Thanks for staying in one thread! Mortgages are very difficult to get post-bankruptcy for at least two years. FHA will not lend until 2 years post discharge, and you would have outrageous interest rates assuming you could even get a mortgage. I am not sure even with a co-signer you could get one. But there are mortgage experts that can answer that question much better than me.

No income verification mortgages are a thing of the past. Three to four years ago you would have been able to do what you are describing, but in the post housing bubble recession it will be very difficult if not impossible.