Is my attorny nuts??

[wminotauro1]

I posted some othe questions in the chapter 7 forum and got good replies and thx to anybody that did reply but I have another concern......my situation with a rental property. I own the property 50/50 with a friend. There is no equity and is most likely upside down. My attorny suggested that I "quit claim my" my interest in the property over to my friend so her name is the only one on the title. The attorny suggested that the trustee will not care because there is definately no equity in the property for him to liquidate.....does that sound right?

[wminotauro1]

this is a chapter 7 BK and I have not filed yet.

[Flamingo]

What is the value of the property and the amount of the mortgage? Has an appraisal been done on the property? You are required to report any transfers of property out of your name within a certain time period before filing so the Trustee will definately want full financial information and a copy of an appraisal.

[HHM]

What your attorney suggested should not be a problem. If there really is no equity in the property, then there is nothing for the trustee to pursue.

[wminotauro1]

Oh wow. Maybe he is nuts then. We havent had an appraisal recently. It was appraised at $220,000 in early 2006. Very similar models in the same area are selling for around $205,000. We have an interest only loan also so we havent been paying anything into the equity of the property yet either, but our loan is $218,000.

[wminotauro1]

oh i started writing that befor you posted HHM. I didnt see what you wrote first. That is what I thought. Plus if they let my friend take over the loan and not repo the property and try it at auction my friend will pay the loan. Problem solved.

[Flamingo]

Oh wow. Maybe he is nuts then. We havent had an appraisal recently. It was appraised at $220,000 in early 2006. Very similar models in the same area are selling for around $205,000. We have an interest only loan also so we havent been paying anything into the equity of the property yet either, but our loan is $218,000.

Without a recent appraisal as to the value of the property and a transfer of title from you to someone else just prior to filing bankruptcy, I am wondering if the trustee would take a guess as to any non-equity in the proporty. HHM and your attorney are correct but will you have to prove there is no equity as to that transfer just prior to filing BK or will they just take your word/your attorney's' word? An appraisal from 2006 is too outdated. While some property values have declined in today's market, some have risen depending on area/location. I would certainly ask your attorney.

[wminotauro1]

I will do Flamingo. Thanks

[FreshLikeADaisy]

Wminotauro1, a note of caution: you may not have any problems with the property transfer during the bk if it's not technically an "asset", but you may trigger your mortgage holder to foreclose if you quitclaim your portion of the property over to your friend, bk or no bk. By doing so, you just converted your portion of the loan from secured debt to unsecured, and mortgage lenders don't like that. Most mortgages written from the late 80's onward have a due-on-sale clause that makes the entire loan immediately payable if the property itself is deeded over to a third party anytime during the life of the loan. If you google "due on sale clause mortgage" (without the quotes) you'll find out more about this.