Transfer assets before the judgement

[sparkling]

[keepmine]

You need legal advice specific to your state. You may live in a state that allows your portion of the equity in the home to be exempt from judgment creditors.
In general, what you're proposing is called a fradulent transfer and all states have a fraudulent transfer act that will allow a judgment creditor to reverse the transaction.
They'll find it when they look at the public records and note the transfer of ownership.

[eddiep]

go talk to a lawyer, it is much better to find out if that is legal or not before you do it. Are you planning to file bk? If so you may be able to remove this lien (if they get one) from your property in bk. Have you talked to the lender on house #2 to see if there is anything they can do? If you have the ability to pay off house #1 could you use that money to save house #2 so that you can protect your credit rating as well? If the house gets foreclosed on or you file bk it will be your credit that is trashed. Man you guys (you, your hubby and your brother) must be stressed to the max!! Talk to a lawyer, talk to the bank. good luck!

[dingdong]

You might be able to put it into a living trust and protect it.

Not super knowledgable about trusts, but it may be an option to consider reasearching.

[HHM]

Fraudulent transfer is fraudulent transfer. Transferring property when there is a known claim will be a problem.

You need legal advice from a lawyer.

[catleg]

Ask Bernie Madoff's wife how it worked out in a few years when the dust settles.

[sparkling]

Thank you so much for your very helpful replies, I really appreciate it.

We live in Virginia and both houses are located in VA as well. The house no. 1 was bought really cheap many years ago and it is worth almost 4 times the price we paid for it. We still do have some mortgage left on the house but it’s around $70 K and the house itself is worth around $400 K now.

1) I did some research and found out Virginia is one of the few stated that allows a special type of tenancy between husband and wife known as tenants by the entireties. From what I learned, property owned in this manner will have immunity from the claims of separate creditors. Does that mean now that house no. 1 is under both my husband and I name, the creditors can not put a lien on it or get a judgment against it?

2) Also, from what I learned per Virginia law, the equity of the home we live in will be all ours and creditors can not claim that amount, am I right? (Under Virginia Exemption law).

3) We will definitely go see a lawyer next week but in the meanwhile, I would like to know what my possible options are in terms of keeping the house no. 1 safe.

By the way, what kind of lawyer should we go to see?

Thanks in advance

[keepmine]

I'd look for an attorney that handles asset protection cases.
Is your home currently titled T by E?

Here are Virginia's bk exemptions. If your home is held T by E you're in good shape. If not, Virginia seems to have some very poor exemptions.

http://www.bankruptcyinformation.com/VA_exemp.htm

[DeadManCrawling]

TbE is a good option to work with. But only if the house is titled that way.

In some states marital property is assumed to be TbE as a default. This is not the same everywhere.

Check with your attorney.

In some states, it is only TbE if the deed is noted as such: (House Address) held as an asset in Tenancy By The Entireties, or something similar.

If it is NOT there, then it would be useless, at least in those jurisdictions which do not assume TbE protection. Note that if the house was acquired by either of you before the marriage, TbE will almost certainly not hold up. Additionally, to confuse matters further, some districts have ruled that 2nd mortgages and even refinances can ruin the TbE exception. Some cases it has held up under these conditions, but not always.

Please keep us updated, this is a factor for many of us.

Now, also look over your paperwork on the other house, the one you want to get rid of. If your husband is connected in any way, that might void TbE protection, since you woud then have that debt mutually, which is the determining factor for whether a creditor can access it, in spite of TbE protection on your main residence.

Complex stuff in some states, please let us know what your attorney advises.

[sparkling]

Thank you for the replies.

The house no. 1 was bought after we got married and I guess since it’s located in Virginia, it is TBE. How can I check that to make sure?

Both my husband and I applied for the loan to buy this house we’re currently in (not the one my brother lives in). Now that both our names are on the mortgage, will that void TBE?

DeadManCrawling,
"Now, also look over your paperwork on the other house, the one you want to get rid of. If your husband is connected in any way, that might void TbE protection, since you woud then have that debt mutually, which is the determining factor for whether a creditor can access it, in spite of TbE protection on your main residence."

Did you mean the house which brother currently lives in or the one I owe with my husband?

My husband and I bought house no. 1 together (the loan is under both our names) and for the house no. 2, I was the one who applied for loan not my husband...

Thanks again

[DeadManCrawling]

The house you live in may be protected either way. It gets confusing, and varies from state to state. It is best if the actual DEED says (Address or legal description) to be held as property in The Tenancy By The Entireties with both you and your husband's name.

In some states that is not necessary, as TbE is assumed. In others, TbE is NOT assumed and if the deed does not include that very specific statement, TbE is voided and invalid. You need some advice from an attorney to figure out what applies to your particular situation.

Yes, I was referring to house No. 2. Again, consult an attorney on this matter, but there may be, because of the same TbE statute that COULD save your main home, a danger that TbE, if assumed in ALL marital purchases, can get you in trouble here as well.

Here is the scenario: If TbE is, in fact, assumed on ALL marital property, and no statement needs be noted on the deed to reflect this, then you in fact own BOTH homes in TbE.

This negates your TbE defense totally, as you are then BOTH responsible for the second home (Brother's), because TbE is assumed. It does not matter that only you applied for the loan. Under this scenario, it is automatically assumed to be TbE unless you specifically deeded it in some other fashion.

The very defense you propose (TbE) to save your main home, may make you both liable for the second home, and sink your chances of success.

What it means, is you cannot have it both ways.

If your main residence is presumed to be protected by TbE, under state law, then your second home (brother's place) is probably also presumed to be TbE, and could open you up to liability, unless you did some very specific wording on the deed of the second place. Note that to change a deed at this stage would be fraudulent and likely land you in all sorts of trouble.

The second home would then, under TbE, be a mutual debt, and negate the protection offered by TbE on your main residence.

You really need an attorney to sort this out per your situation, and I hope you will update us as you learn more.

Good luck!

[sparkling]

DeadManCrawling

Thanks so much for your reply. We’re going to go see a lawyer this week.
I just checked the original title of the home we currently live in (house no. 1) and it does say TBE. But then couple years later, we refinanced it and the new title doesn’t say TBE… Does this mean we longer have TBE ownership of the home?

Thanks again for your help and I'll keep you posted...

[StartingOver08]

Why would you have changed the DEED for a refinance? That is not a normal occurance.
When you refinance you are changing the mortgage, not the deed. Sometimes you get new title insurance (rarely) - but again, that has nothing to do with your deed.

Check your county records to see exactly what your DEED says - bring it to the attorney consult.

[DeadManCrawling]

I have indeed seen cases that mirror yours. TbE was stated on the first deed, but was negated on the refinance, when the deed was changed. I am unclear why a deed would be altered for that, but it was.

The court ruled against the debtor and TbE was lost. There are other cases where it held up, and only an attorney can guess what is more likely.

Good luck.

[sparkling]

Hi all,

Sorry for the delay in replying back...We went to see a lawyer and he said TbE will save our house... Thought I post it here and keep you all posted, again, thanks for your helpful replies...