My mother added me and my sister to her house deed, now I'm filing ch 7, problems?

[murphsmom]

I don't disagree at all that this will be considered an asset. But based on the tables from the IRS that my own attorney said the local trustees use to figure the value, my stake in it would be approx $11,500. What would the reason be that I would not be allowed this as my wild card exemption? Since it was stated that my husbands portion of the wild card can't be used against my asset, could I use my portion of the wild card, $10,025, exempt that full amount and buy back the difference of $1475?

I've tried to read more case files, the the only one I'm really finding is the Florida guy who actually LIVED in the home for the past 40 years. His own mother ended up buying it back at auction for $10,000, she was the only bidder and probably could have bid $1000 and won it.

I simply can't believe that this has not come up more frequently.

[tobee43]

I don't disagree at all that this will be considered an asset. But based on the tables from the IRS that my own attorney said the local trustees use to figure the value, my stake in it would be approx $11,500. What would the reason be that I would not be allowed this as my wild card exemption? Since it was stated that my husbands portion of the wild card can't be used against my asset, could I use my portion of the wild card, $10,025, exempt that full amount and buy back the difference of $1475?

I've tried to read more case files, the the only one I'm really finding is the Florida guy who actually LIVED in the home for the past 40 years. His own mother ended up buying it back at auction for $10,000, she was the only bidder and probably could have bid $1000 and won it.

I simply can't believe that this has not come up more frequently.

i don't know really, however, your name has been on that deed LESS than ONE year. so while i totally understand everyone views this as an asset or possible asset, i just still believe it is something that can be worked out.

if you have decided to go the route of bk, i also, am not clear to even guess if the trustee decided to consider this an asset, that you couldn't use it as your wildcard exemption. but once, again, this really did happen to us. we just listed it on the petition with a copy of the OLD deed and the new quit claim deed with an explanation and PROOFS...that the property was not just quit claimed deeded over to hide assets , but was IN FACT the other parties property and we were added at a MUCH later date.

it did work for us. however, and it was even more complex situation because our situation without prior to this post wanting to get into ever last detail, but it also included an outstanding mortgage...so it was a MESS...big time. we made it through it. it was hard work and tons of paperwork to prove our position. our atty said really, the trustee just doesn't want to get into this mess and it's not a ton money....and he was right.

but that was OUR case...each trustee views things differently and one never knows, that's why i understand you want to be certain about your position. frankly, we never were, and had made the decision may the chips fall where they will, and we will deal with it, whatever the outcome.

[murphsmom]

Here is a case in FL where the debtor did quit claim the property back to the mother (removed herself from the deed), and the court decided that is was not a fraudulent transfer because she wasn't hiding any asset with value...

" In In re Moodie, 2007 WL 738435 (Bankr.S.D.Fla. 2007), a debtor made a prepetition transfer of her joint interest in a parcel of real property to her mother for no consideration. Prior to that transfer, the debtor’s mother purchased the real property along with the debtor as joint tenants with rights of survivorship. Despite being listed on the deed, the debtor paid no consideration for the property and in fact, the debtor’s mother purchased the property in their joint names solely as an estate planning measure. The Chapter 7 bankruptcy trustee brought an adversary proceeding seeking to avoid as fraudulent the prepetition transfer of the property to the debtor’s mother.

In analyzing these facts, the bankruptcy court determined that there was a resulting trust in favor of the debtor’s mother and that the debtor held a bare legal interest in the property. The bankruptcy court found that a resulting trust arose presumptively when the property was purchased by the mother and then transferred to the debtor under circumstances which raised an inference that the mother did not intend that the debtor should have the beneficial interest in the property. Based upon these facts, the Court found that the transfer of bare legal title without consideration was not for less than reasonably equivalent value because bare legal title is economically valueless to the debtor. Consequently, the transfer of the property to the debtor’s mother for nothing in return did not constitute less than reasonably equivalent value. Accordingly, the Court found that the trustee was not able to prove one of the elements of a fraudulent transfer under 11 U.S.C. §548(a)(1)(B)."

I'm thinking now, that it might be safer to actually quit claim the deed, remove myself from it. Yes, it would raise eyebrows, but I've only been on the deed for 6 months, can clearly prove it was for estate planning purposes only, no money transferred, etc... Like it states above, it's economically VALUELESS to me right now, and will remain so for at least 4 more years.

Back on the roller coaster....

[debee]

@murphsmom

I noticed you are back at the 10K exemption amount. Are you electing to use NY exemptions then? Don't forget if you use the federal you have a much higher exemption amount.

Since your attorney has filed these types of cases before, I would bring any concerns raised on this forum to him. See what he says about things you have heard hear.

Good luck.

[tobee43]

Here is a case in FL where the debtor did quit claim the property back to the mother (removed herself from the deed), and the court decided that is was not a fraudulent transfer because she wasn't hiding any asset with value...

" In In re Moodie, 2007 WL 738435 (Bankr.S.D.Fla. 2007), a debtor made a prepetition transfer of her joint interest in a parcel of real property to her mother for no consideration. Prior to that transfer, the debtor’s mother purchased the real property along with the debtor as joint tenants with rights of survivorship. Despite being listed on the deed, the debtor paid no consideration for the property and in fact, the debtor’s mother purchased the property in their joint names solely as an estate planning measure. The Chapter 7 bankruptcy trustee brought an adversary proceeding seeking to avoid as fraudulent the prepetition transfer of the property to the debtor’s mother.

In analyzing these facts, the bankruptcy court determined that there was a resulting trust in favor of the debtor’s mother and that the debtor held a bare legal interest in the property. The bankruptcy court found that a resulting trust arose presumptively when the property was purchased by the mother and then transferred to the debtor under circumstances which raised an inference that the mother did not intend that the debtor should have the beneficial interest in the property. Based upon these facts, the Court found that the transfer of bare legal title without consideration was not for less than reasonably equivalent value because bare legal title is economically valueless to the debtor. Consequently, the transfer of the property to the debtor’s mother for nothing in return did not constitute less than reasonably equivalent value. Accordingly, the Court found that the trustee was not able to prove one of the elements of a fraudulent transfer under 11 U.S.C. §548(a)(1)(B)."

I'm thinking now, that it might be safer to actually quit claim the deed, remove myself from it. Yes, it would raise eyebrows, but I've only been on the deed for 6 months, can clearly prove it was for estate planning purposes only, no money transferred, etc... Like it states above, it's economically VALUELESS to me right now, and will remain so for at least 4 more years.

Back on the roller coaster....

that's what we did....pull that strap tightly around you!! LOL!!! you'll make it through this.

and this case is exactly what our position was...and an explanation and clarification of why a quit claim deed was done.

[murphsmom]

Debee, I went back to the 10k exemption because the attorney in Michigan in the post above said that my husbands portion of the Federal wild card exemption could not be used for an asset that is solely in my name?

I emailed the attorney about this last night. No answer yet. Thinking of calling him soon. I hate feeling like I'm bothering him, but why have I paid him over $1000 so far, so he can help clarify these things, right?

[Pandora]

Why not just file jointly under Ch. 13 - thereby doubling all exemptions, claiming the mom's house, as well as keeping any "luxury items" (i.e., boat). Chances of trustee taking that in a 7 are high....

[debee]

@murphsmom

I agree that you can't use your husband's portion to cover your asset.

However, as was discussed last night, if you use the federal exemptions and file jointly (so long as it works out with reference to your other assets) you have more than enough on your own (over 20K per person) to use toward exempting property.

You could cover the house by yourself with money leftover. You can use what's left to exempt something else.

If you scroll up and re-read VYum's thread, she describes how you can use the exemption.

Just be a little patient with your attorney. He may be in court today. It's better that he review your case before replying anyway.

[tobee43]

Why not just file jointly under Ch. 13 - thereby doubling all exemptions, claiming the mom's house, as well as keeping any "luxury items" (i.e., boat). Chances of trustee taking that in a 7 are high....

i really think that is just a good viable suggestion, really...you can always at a later time if things get worse switch over to a 7.

[murphsmom]

Just talked to attorney. He said we'd each have a wild card exemption of $11,962 if we proceeded as planned. He also thinks that the tables for figuring my interest in my moms house will not favor that amount, and that it would be valued around $20,000, we are meeting tomorrow to crunch those numbers.

He said DO NOT TRANSFER THE DEED, it's a clear issue in Western NY courts that has been beaten to death. Clearly fraudulent and would open a pandoras box that we would like to avoid. So, we won't be doing that.

He then went on to say that we both should consider joint Ch 13, we will look at everything tomorrow and decide from there. I'm thinking that if the wild card doesn't cover my moms house, then we have no other option.

Together, we have approx $64,000 in debt that we wanted to discharge in Ch7. Now my head is swimming regarding ch13.

If I can't file 7, and have to hang onto $25,000 in debt, then a chapter 13 plan of anything less than $25,000 repayment would benefit us.

Is there a way for me to figure what our expected repayment would be in a 13? Don't even know where to begin with this issue. We clearly passed the means test for ch7, is the means test the same for 13?

Now my roller coaster is doing loop-de-loops. Holding on tight!

[Pandora]

...would open a pandoras box that we would like to avoid.

Is there a way for me to figure what our expected repayment would be in a 13? Don't even know where to begin with this issue. We clearly passed the means test for ch7, is the means test the same for 13?

Dont open me... I'm bad ju-ju (hugs ya!) Hang in there murphs - there's a solution to the issues at hand.

Means test is the same, you can be under median and still file Ch. 13 in order to keep assets / strip a 2nd / etc. We qualified for 7 via means, but had positive DMI (sched. I & J), wanted to keep assets (vehicles) we owned outright as well as strip our 2nd.

[tobee43]

Just talked to attorney. He said we'd each have a wild card exemption of $11,962 if we proceeded as planned. He also thinks that the tables for figuring my interest in my moms house will not favor that amount, and that it would be valued around $20,000, we are meeting tomorrow to crunch those numbers.

He said DO NOT TRANSFER THE DEED, it's a clear issue in Western NY courts that has been beaten to death. Clearly fraudulent and would open a pandoras box that we would like to avoid. So, we won't be doing that.

He then went on to say that we both should consider joint Ch 13, we will look at everything tomorrow and decide from there. I'm thinking that if the wild card doesn't cover my moms house, then we have no other option.

Together, we have approx $64,000 in debt that we wanted to discharge in Ch7. Now my head is swimming regarding ch13.

If I can't file 7, and have to hang onto $25,000 in debt, then a chapter 13 plan of anything less than $25,000 repayment would benefit us.

Is there a way for me to figure what our expected repayment would be in a 13? Don't even know where to begin with this issue. We clearly passed the means test for ch7, is the means test the same for 13?

Now my roller coaster is doing loop-de-loops. Holding on tight!

hear you on pandora's box...LOL!! (no pun intended sweet pandora! )

the fact is our bk was a few years ago...and your atty's has now seen or most likely knows how many of these situations NOW play out. interesting but so important. we filed our bk at the beginning of ALL this mess. it may be why, although an issue, not one that was insurmountable, as it may be presently. and, apparently, your atty KNOWS how the courts are viewing this...i'd go with his feeling about this situation. it sounds like he's really trying to work with you.

[debee]

@murphsmom

He's still estimating the life estate value. If he ran the actual figures, he'd give you the solid number. You have to be patient and wait for his actual number.

If it were me, I would hang tight until the meeting and see what his figure is for the life estate valuation. If it's substantially higher than the one we got here (it will be a little higher because your Mom's birthday is next month), I would rerun his math.

As for the exemptions, no idea what he (or his paralegal) did there. Is there an asset you forgot?

Also, at tomorrow's meeting I would get copies or make copies of his figures & his exemption plan so you can go over it at home if need be.

eta: there is more than one exemption configuration that will work. 6+4 and 3+7 both equal 10. Hang in there.

[murphsmom]

We definitely have not forgotten an asset. Boat $4500. Sons car $1200. Equity in house $4000. We listed all our other items like clothing, electronics, tv's, stereos, lawn equipment, basically everything we own which isn't worth much, truly. All used or even purchased used when we bought it. One flat screen TV that we bought 3 yrs ago for $900.

Will ask about the exemption amt. tomorrow, and also get the actual #for my moms house.

He did say that we'd want an actual independent appraisal on the house before we filed. So now I need to tell my mother why this needs to be done. Oh joy.

[debee]

@murphsmom

I know you wanted to avoid that. Maybe you could just remember your life as a teenager and lie to her for old time's sake. Tell her it's part of your financial planning or something like that. Maybe you could say that since it's an asset with present value it impacts college financial aid planning for the kids.

Also, If it were me, I would write out your own exemption plan tonight using the federal set and also your own valuation of your mom's house using your attorney's webpage (same as what we did here) and take that with you. Include each of you steps in the math so it's easy to follow how you arrived at your number.

He ought to be ready for you with solid numbers and a plan in mind, and after he tells you what it is, if it does not match what you've got, then take out your papers and ask him why it can't be done the way you did it.