Weird issue, chapter 7 "asset" need your help

[pandacb]

In 2008 we bought a one bedroom mobile home for our disabled adult daughter. We paid $10k (with a 401k loan that we still owe 3 years of payments on) for a one bedroom and we overpaid by about $2k because it was clean, empty and we could quickly get her off the street.

We did this after an exhaustive search for a rental. Her income is SSI and it requires that shelter costs be paid for without private subsidy. She has been on the public subsidized housing waiting lists for years without ever getting help.

SSI also requires our daughter's bills to be paid by a representative payee (me) because she is not competent.

Now we need to file bankruptcy, a Chapter 7, it looks like.

The attorney says that we need to transfer the mobile home into our daughter's name and explain the situation to the Trustee. The attorney says I also need a true fair market value for the thing (she has done ALOT of damage to it.) The attorney says once we explain it the Trustee that maybe we'll have to pay him "$1000 or so."

Well, ok, since we're paying for the attorney, I guess we have to take his advice, right? Except for one thing...our daughter is not competent. When we sat her down to talk about this her first reaction was that she could go down to Payday loans and get some money since she owned her house now!

Please, please tell me what you think. Just say your thoughts, I need to hear them.

And, THank you.

[mama2three]

I don't know why your attorney would suggest you transfer it into your daughter's name. The trustee is going to look at that as a fraudulent transfer to a family member and probably take it back anyways. I believe the look back on family transfers is 2 years.

[pandacb]

yes, I asked him about that and he said it isn't a fraudulent transfer if you aren't trying to hide it.???

[mama2three]

yes, I asked him about that and he said it isn't a fraudulent transfer if you aren't trying to hide it.???

I don't know that sounds really weird to me. I guess it could be seen as non-fraudulent if you tell him about it and the trustee could give you a chance to buy it back. But if that is the case, what is the point of transferring it in the first place? You could offer to buy it back from the trustee even if it is under your name. Who knows, the trustee may not even want it if it isn't in good condition and not worth much.

[pandacb]

I hear you and agree. Also, our daughter has done so much damage to the place that paying the Trustee anything would be so harsh. (especially when we make payments on it every month - I know it is to 401K but it still hurts right now).

I wonder how this would even work if the Trustee wants it? Would he call a junk dealer to haul it off the space? Would we have to pay for that?

The end result would be our daughter back on the streets and us out 10k for nothing.

Creditors might gain a few hundred dollars? Got to be a better way.

[frogger]

It would be insane to "transfer" it to your daughter. A used 1 bedroom mobile home that is destroyed is a liability, not an asset. If you transfer it without getting fair market value, it is a preferential transfer that will be voided by the trustee.

If it's a junker, tell them to come and get it. You'll be able to get it for little to nothing.

I would also be looking for another attorney. Explain all you want, the trustee must follow the law too.

[StartingOver08]

I agree with Frogger. The advice from your attorney makes no sense at all. Get another attorney. This one will cause you problems all the way through your BK. Transferring the trailer to an insider on the eve of BK has got to be one of the worst solutions for your situation. The fact that your daugher is not competent is a significant factor too. Get away from this attorney, even if you have already retained him. He is bad news.

[pandacb]

I researched my attorney for months and I trust him. I've just written to him again to see if I got something wrong but I don't think so. I agree with you, Frogger. We need to put a couple of grand into it to fix floors, doors, ...she even broke the toilet during a "spell."

Thanks and keep your thoughts coming!

[justbroke]

yes, I asked him about that and he said it isn't a fraudulent transfer if you aren't trying to hide it.???

Everyone gets worried about the word "fraud", but the bankruptcy code calls both types of conveyances, fraudulent. One type is actual fraud, and the other is constructive fraud. Both are what they call an "avoidable" transfer and fall under the fraudulent conveyance part of the code (11 USC 548) Transferring property to your daughter without receiving "value" for it, is constructive fraud.

I see no reason to transfer it anyhow. Just figure out the value of it, exempt as much of the value as you can, and then offer the Trustee a reasonable amount to purchase the non-exempt equity.

I don't know why (some) attorneys try to make something more complex than it needs to be. Transferring it is just going to answer the Trustee. Besides, I believe that SSDI asset requirements limit what your daughter can own anyhow.

I really do hope you have a great attorney.

[tigergem]

This might not help you now facing your bankruptcy, but you might want to look into setting up a Special Needs Trust for your daughter. I understand this is a vehicle for holding title to her assets without disqualifying her for benefits due to ownership of assets, and also will not allow her to go willy nilly with anything she "owns".

There is an article about it here to help you get started understanding: http://ezinearticles.com/?Setting-Up...tive&id=431745

Several years ago I heard about this at a presentation held by ARC of Texas, so ARC in your state might have the information as well. I didn't see any reference to it on the main national ARC web site. I wish I had retained the information, I'm sorry I did not. It was quite detailed actually, about how to set up and use the Trust.

[frogger]

And that's good info tigergem, but he's got a WORTHLESS mobile home people.

Key word. WORTHLESS

Don't give 'em a dime. Tell the trustee to come and get it.

You'll still have it tomorrow....

[justbroke]

frogger, that suggest that you're willing to give up on the trailer and actually surrender it. This could mean the Trustee instructing the resident to vacate or pay rent. Be careful what you wish for.

And, it apparently isn't worthless. Since the Attorney is suggesting offering $1,000 for it, that means it has some value over and above $1K, and that's after exemptions.

When bluffing, always be prepared for your bluff being called.

[pandacb]

Thank you for all of your comments. I have been instructed by the attorney to establish fair market value. I have researched two ways: Comparables that are for sale minus the cost of repairs, and also what a broker would give me to come and take it away. Either way, it was worth nothing or less because of the damage our daughter has done to it in the 15 months since we bought it. Another factor is that the bank won't loan on it and there aren't too many people who would be interested in such a thing walking around with cash.

However, you all have indicated that there is some exemption available. Are you talking "wildcard" or ???

We don't want to put anymore money into it...space rent has gone from $460 to $505 in a year. Trustee can have it is what we are thinking. Is Trustee responsible for the space rent if he diddles around to take it?

Thanks again

[frogger]

frogger, that suggest that you're willing to give up on the trailer and actually surrender it. This could mean the Trustee instructing the resident to vacate or pay rent. Be careful what you wish for.

And, it apparently isn't worthless. Since the Attorney is suggesting offering $1,000 for it, that means it has some value over and above $1K, and that's after exemptions.

When bluffing, always be prepared for your bluff being called.

Thanks justbroke. You are correct, however,

On an old junker, it's a bluff that I would take.

The problems associated with an old mobile home are many, including the fact that most areas now require for you to get permission in advance in order to move it, and many do not grant permission for old/trash mobile homes.

It could cost thousands of dollars to move it. Thousands of dollars for a $1K mobile home doesn't make economic sense.

Mobile homes are cheap. Used ones are a dime a dozen.

Depending on how it was set up, it may not be able to be moved. Got a porch built on? Roof changed? Blocked in around the bottom?

All create "opportunities" for a trustee to lose money.

Just my opinion. Your mileage may vary.

[frogger]

And it's 5:00 somewhere. I'm going to meet my avatar. See you tomorrow!