want to exempt new home but cant move in

[namartin3]

Hi all, just discovered this site tonight and im very impressed.

We are planning on filing ch7 very soon. We are going through a forclosure and currently have about 1 month left of the redemption period before the sheriff kicks us out.

My dad was kind enough to loan us some money to purchase a cheap house so we'd have a place to live, but it turned out there are some construction issues with the house so the township wont give us a CofO until there all resolved.

So with that background, can anyone tell me if i can put my new house as my homestead exemption here in Michigan, since I technically dont live in the home yet?

Also, how long, if at all, will filing for ch 7 keep the sheriff away from kicking us out of our old house.

Thanks in advance.

[keepinitreal]

Since you're planning on filing Chapter 7, make sure your loan from your father is a "perfected lien" so you don't appear to have a new house with lots of equity when you file.

Otherwise, the Trustee will sell your new house and use all of the money to pay off your other creditors.

[tcreegan]

new house

Hello namartin,

Nice Dad by the way.....

Also, how long, if at all, will filing for ch 7 keep the sheriff away from kicking us out of our old house.

The BK will usually delay the process by at least a month and maybe for 3 months.
You file and foreclosing halts.
A meeting of creditors (341 meeting) is scheduled for a month later.
After 341, there are 60 days for objections in the case
Discharge at 60 days if all goes well

Most lenders, not all, will stop all proceedings until after the 341 where they will find out from the trustee what they plan to do with the assets. Then they apply for relief from stay and go back to the foreclosing process. This almost always takes a month, and in some places might take 2-3 months.

so with that background, can anyone tell me if i can put my new house as my homestead exemption here in Michigan, since I technically dont live in the home yet?

You get to chose the "homestead" If you are temporarily out say for pest exterminating, a remodel job, you are hiding from your in-laws, etc, it is still your primary residence and you will be living there as soon as conditions allow.

The MOST IMPORTANT aspect is what keepitreal mentioned: Who is on the deed, does Dad have a 'perfected lien', do you have signed papers for the loan, and what will happen to the property in the BK. Here is where a good lawyer earns his pay.

Best of luck to you in all of this, keep us posted,

Tom in Colo

[tobee43]

to be safe you can also just for the time being keep you names off the deed.

you can set it up where you are JUST paying the expenses on the property to your dad. your dad can turn over the deed 10k per year to you and if you have a spouse another 10k for a total of 20k tax free in the next following years.

this is a safe and legal way to do it.

personally, i would just let the first house go into foreclosure...move into the other house and use the expense monies that cover the cost just as expenses...that way your father doesn't have the tax complexities dealing with a "rental" property...and you can still show you are paying living expenses like a mortgage to add to your means test.

as far as getting kicked out...you can go to court and ask for an extention. i know people that did that 4 times..and were able to stay over 2 more years!

also, don't forget to keep track of all your moving expenses because they are tax deductable...and remember you will not have your mortgage to deduct anymore...so every penny counts. also keep track of everything you "give" away to charity as you clean out your house...try to give it to the church or some place that can give you a receipt....

just thinking ahead!

[namartin3]

Hi guys thanks for the replies.

The house was only $24k and my dad loaned me $10k and just told me to pay him back when I could, so it wasnt an "official" loan. I took the rest from my 401k. My name is the only name on the deed (although its the same name as his) so its not like theres an actual lien. Unless I can put one on. I can prove that he loaned me the money if someone was to ask.

When we bought the house we asked the realtor if we were going to run into any legal issues in ch7 and he told us no because we are under Michigans median income and Michigan has a $34k (appx) homestead exemption and our house is only 24k...we just had to wait 6 months before filing. He said he had a client who was doing the same thing.

Now that its about that time, we obviously have to get an attorney, but were a little freaked out that our realtor was just telling us what we wanted to hear.

Also, does it change anything if we wait until after the foreclosure is over to file? To be honest, were not really in any hurry to file, its just that weve been served twice this week by credit card companies (when out attempt at a loan mod failed, we were advised to stop paying the credit cards also because ch7 was going to be unavoidable) so we were thinking this is as good a time as any.

thanks guys.

[tobee43]

well...shut my fingers...a HOUSE for 24k....even i'm at a loss!

[drowning123]

The market is getting worse.

[tobee43]

The market is getting worse.

WOW...drowning...that certainly is an understatment...what can one purchase for 24k???

please share namartin?

[drowning123]

The job market is even worser-er. LOL. But seriously. It's bleak.

[tobee43]

i'm just wondering what the OP purchased for 24K...even in today's market that appears extremely low....don't you think?

maybe it's got no bedrooms???

[bigtim6656]

I can top that one 1 no 2 no 3 no maybe 30 times. We bought our current house for the low low price of ONE DOLLAR, currently we have about 40k in it with tile floors huge tubs, slate on the bath room walls down stairs two kitchens when we get done(setting it up for a duplex). New truss roof with 30 year shingles less then 2 years old.
Mom and dad bought a house at a tax sale for 283 bucks, 250 for a titel search, 50 for notices and mail fees, another 100 or so for court fees for the deed. Plan is about 20k in repairs and use it for a rental or flip it. They just made a offer on the house next to that one for 4500. Needs about 5k to get a new bath kitchen and get it rented ohh the roof needs redecked and shingled.

Either one they can sale after fixing for about 40,000.

My dad has a guy who is going to put up the cash to pu 30 homes off the tax sale. Dad and him will split it 50% and dad told me if I ran the projects he would split his part with him. . Just glad the houses have to sit for a year before fixing them or it would really mess my bk up

well...shut my fingers...a HOUSE for 24k....even i'm at a loss!

[bigtim6656]

around here if you ant got a problem with alittle work 24k can get you a 2 to 3 bed room house needing some work or a 2 story house needing alot of work. A realitor told me if our house was in the next town we could sale it for 120k, here in town 70to80.

WOW...drowning...that certainly is an understatment...what can one purchase for 24k???

please share namartin?

[tobee43]

wow....sounds like someone's making some money in this downward market....also, i suppose a good business opportunity for those that can handle it.

we looked at forclosures but i was too concerned about karma...LOL!!!

[bigtim6656]

Ya they bought a local business that moved mobile homes and such. Dad wanted to turn it into a construction business and flip houses. Things around here have been bad for a long time. Not much has changed since we moved here just shy of 4 years ago. IT was one of the reasons I went ahead with my bk. Kind of hard to get into anything knowing a creditor might come after it or not be able to file. Knowing my luck by the time I get into things all the money will have been made.

wow....sounds like someone's making some money in this downward market....also, i suppose a good business opportunity for those that can handle it.

we looked at forclosures but i was too concerned about karma...LOL!!!

[tobee43]

yes, i hear you! we USE to know people that "flipped" houses, however, now, no one seems to be able to get a mortgage...at least the people that are looking in those price ranges.

maybe the times will change. i know those people also thought about fixing them and renting them out, but the problem with that was they would get people in that would pay the first month's rent and then never ever pay again...and the judges wouldn't put them out on the streets...it turned out to be a terrible situation for them.

i'm sure your father has the right plan and planned this out more carefully...