parent's house

[sarahks]

I am thinking about filing, but am worried about my parents house. They signed it over to my brother, sister, & I about 2 years ago with no money involved. My parents currently live in the house & have for over 30 years. There is not a mortgage on the house. I have my own house & don't live with them. Can this be a problem if I file? Thanks for any advice!

[sunshinepa]

Absolutely, it's an asset and depending on the value, a big one. I don't think the time frame of the transfer is a problem since it's two years ago, but the value will surely have an impact on a BK. Have you spoken with an attorney yet?

[sarahks]

That's what I was afraid of. I haven't spoke with an attorney yet, but that's my next step. I assume the house will have to be appraised & my third will be counted as an asset. I was hoping to get thru this without involving my parents, or them even knowing about the bankruptcy.. if I can even file. I don't think I have any other options at this point. I can't keep the bills paid much longer & or living off credit cards for daily expenses. Oh, what a mess I've created.
Thanks for your help.

[LadyInTheRed]

Sarahks, in Kentucky, you can use federal exemptions. Depending on how much equity you have in your own home that you need to protect, you may have over $10,000 in wildcard exemption you can use to protect your interest in your parents' home. Also, if you file a Chap 13, the interest in your parents' home will be protected if you can pay unsecured creditors at least the non-exempt value of your interest in your parents' home over the life of your plan. In a Chap 7, you may be able to buy your non-exempt interest in the home back from the trustee.

Definitely consult with 2 or 3 attorneys. Asking more question here might help make consultations with attorneys more productive.

[sarahks]

Your information makes me feel more hopeful. I appreciate your help! Thank you...

[chicagoannie]

sarahks - keep posting here and asking questions. I am sure your situation is "fixable" and every here is very helpful.

[AngelinaCat]

Did your parents create a 'life estate' in the home when they signed it over to you and your siblings? I am curious.

In any event, it is an 'undivided third interest' that you own, with your brother and sister owning the other two thirds. Since your parents are presently living there, and this was part of THEIR estate planning, and hopefully, you parents are in good health and expect to live many more years, I don't know that a BK trustee can step in and compel a sale of this property in order to satisfy your creditors. There are too many other people involved, as well as legal title issues. Most likely the trustee would choose to 'Abandon Interest' in the home.

This is something that would be a good question to run by a BK attorney and a Real Estate attorney when you schedule your initial free consultations.

Good luck.

[sarahks]

No, my parents didn't create a life estate when they signed the house over. We had to sign some papers at the lawyers office & the courthouse, then it was done.

I hope you're right about the trustee abandoning interest in the house. That would be such a relief.

Thanks for being so helpful!

[nlanier]

Similar Situation

I'am in a similar situation. However, I have already filed bankruptcy. My siblings and I own my deceased mother's house. I filed because my creditors were suing me. My attorney thought that since we (my siblings and I) formed a closed corporation and we agreed to not sell the trustee might not try to force me to sell my shares. However, at the 341 hearing, the first question asked was about the $12,000 interest I have. I almost fell out of my chair because I knew then he was going after it, and this would cause my siblings to be so mad it me.

I heard from my attorney this week asking if I had meeting minutes from our meetings stating specifically that shares could not be transferred or sold to third parties. I had to contact my sister regarding sending me prior minutes. I couldn't bring myself to tell her why I needed them. No one in my family knows that I have filed bankruptcy.

If the minutes do not state specifically that the shares cannot be transferred or sold to a third party, only a miracle can save me. I could not file for chapter 13 because I am laid off at this time.

Please don't file until you know all of your options.

If anyone have any suggestions for me, please help!

nlanier

[LadyInTheRed]

nlanier,

The best advice I can think of is to let your siblings know what is going on. They are likely to find out anyway. If the trustee does not abandon your interest in the property, your siblings could buy your interest from the Trustee. The sooner they know what's going on, the sooner they can consider this option and work to raise funds for a purchase.

Hold your head high. Bankruptcy is nothing to be ashamed of!

Good luck to you. Please let us know how things turn out.

[frogger]

I hope you're right about the trustee abandoning interest in the house. That would be such a relief.

The only reason that the trustee should abandon the house is if it is of no value to the estate. If there is value there that can be used to pay your creditors and get the trustee more commission, the trustee is going to want to sell your part to someone, preferably you.