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Assets and Exemptions Questions

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    Assets and Exemptions Questions

    I was wondering what might happen to my assets in lawsuits and BK. I am about $50,000 in debt total with about a half dozen CC's and will have to file BK sooner or later. I probably have to wait 2 years until I file to be safe. I was just wondering what may happen if I get sued before then. Here is what I have that are the only things of value I actually own.

    Basically I have some undeveloped land worth less than $8000 because it recently failed a perc test and was disapproved by our health department for development. This value is based on the assessed value which is supposed to be the same as full market value in my state. I believe if the property was good it would be worth about $90,000 now. Lots like mine are mostly abandoned in my neighborhood since you can't build on them. This property only has value to me only because it is attached to the property my family lives on and is just an extension of that property and gives us some more breathing room.

    My other asset is a car that is worth about $10,000 KBB retail and about $8,000 good condition private party. This is car has my name and one of my parents name on the title. Where it gets complicated is my other parent loaned me $9000 for this car when I bought it. I have only paid that parent back $4500 so I still owe $4500. That parent does not have their name on the title. We have nothing official on paper about this loan agreement other than cancelled checks. I'm curious if that by itself offers any legal protection in judgments or BK. Since I only own half the car and I owe about what that half is worth, I really have no equity in the car. I sort of doubt the law sees it that way but I am still curious what anyone thinks on this.

    In my state I have a $6000 wild card exemption for judgments and BK. In addition, I have a $5000 property exemption that is only valid in BK. I figure that by the time I file for BK, I can exempt everything. What bothers me is if I get sued and get a judgment against me before I can BK, then I only have $6000 to work with. How likely is it I would lose either of these assets?

    Thanks and this is a great resource btw. I think I have spent thousands of hours in here just reading posts.

    #2
    If you are going to wait a year or two before you file, you might sign the title of the car fully into your parents name. If it comes down to a judgement where they try to come after assets, the car won't be yours at all it will be your parents car that they have let you borrow since you are in hard times.

    Once you get around to filing (assuming you wait a couple years) that transaction should be far enough out that the trustee won't go back that far and it will be exempt anyways.

    As for your actual property, they can put a lien on it, but that really does nothing unless you try to sell the property and the BK will wipe off the lien. Fortunately only a mortgage holder can foreclose on your house and sell it out from underneath you, anybody else just slaps on a lien and hope you care enough about the lien to pay it off.

    Comment


      #3
      Willey13, if you are going to be a year or so to file, can you go to the property appraiser's office and get this lot legally attached to your homesteaded lot--if you do have it homesteaded--since it basically is unsellable as it is? Boy, what a run-on sentance. If you can do that, it means you have to buy a survey, with a new legal description and file it with the property appraiser and tax assessor's offices.

      Good luck/
      "To go bravely forward is to invite a miracle."

      "Worry is the darkroom where negatives are formed."

      Comment


        #4
        Can I really transfer my half of the car without it being a fraudulent conveyance if done under two years? If I have my facts right, since I am a joint/co-owner, I only need to exempt half the value of the car correct? A creditor would have to pay the other persons share of the car plus whatever I would exempt on my half? The good thing is the car is at the point of needing its tires, brakes and other longer term maintenance done when it comes time to appraise it's value. The body has some ugly scratches and smudges also. The engine check light comes on from time to time also. I know what caused that check light propblem but I will not bother fixing it until this is over. For now I just reset the light myself when needed. One thing I have learned is that little light can really put a dent in the value of a car.

        The problem with attaching the property is it may significantly raise the property value of the homestead property since the perc test problem will not matter once it is attached to a good property. The owner of that property is on SSI and you have to be careful on the amount of assets you have while receiving those bennefits. I would also have to see how that would effect a low income property tax credit. I will look into that though. If I could transfer the property to my other parent, then that would not be a problem. My parents do not live together so that parent can possess the asset without any problem. But then I need to receive fair value for the property and dispose of that money without rasing any red flags etc. But what I am really curious about is are properties like mine ever seized since I have never seen disapproved properties developed in my area. They are all overgrown and look abandoned and sit for decades. If they only put a lien on it and then just sit and wait for me to sell, then that is fine because they will wait a long time. I'm really just wondering if others have experience with this kind of situation.

        Does anyone know what the costs are for seizing low value property like mine? It looks like its an expensive process when they take and sell good properties.

        Comment


          #5
          Originally posted by AngelinaCat View Post
          if you do have it homesteaded--since it basically is unsellable as it is?
          Good luck/

          There is no homestead exemption in my state if that is where you are going. What you said would remove the property out of my name only. I really dont know if my property is sellable, I just know it's value was significantly reduced after the perc test. Theoretically, if they ever installed city sewage, then the property would have full value again. That is not likely to happen anytime soon where I live.

          Comment

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