In preparation for an attorney meeting in a couple of weeks, I've been playing with Best Case software and the NOLO C-13 book. For the most part, it appears my filing will be pretty straightforward: federal exemptions, IRS values on all expenses except my house payment. The trustees here require that all cars be in the plan.
The single big issue I see is the valuation of my rental houses. They make money, so I don't plan to give them up. According to all the attorneys I've spoken with, the trustees here DO NOT want to take them. By giving reasonable estimates on vacancy rates and repairs, they'll make enough money for the trustees to leave them in my hands.
The issue with the valuation is that the trustees prefer to use property tax appraisals and the county has these houses appraised at boom values. This results in a chunk of faux equity that I would have to cover by paying more to the unsecured creditors. The county is reappraising, but the results won't be released until July.
Obviously I'm going to ask my attorney for his take. (If you've read my other threads, this is the attorney who is 100% BK, and owns rental properties himself.) But suddenly today, I think I have been overlooking the obvious: are they "mine" or "joint" with my wife?
Part of it is the nature of Arkansas law, and my background. So please let me give an excessive amount of information
So my question… in preparing the forms I have been assuming these are “my” houses (and faux equity) because of the family history... keeping my wife at arm's distance. But I think that to the trustee… who doesn’t know the history (and probably wouldn’t care)… he would simply assume they are joint assets. If so, since my wife is not filing, the faux equity affecting my payback would be cut in half.
Am I thinking correctly here? Is it that simple?
Thanks, everybody!!!
The single big issue I see is the valuation of my rental houses. They make money, so I don't plan to give them up. According to all the attorneys I've spoken with, the trustees here DO NOT want to take them. By giving reasonable estimates on vacancy rates and repairs, they'll make enough money for the trustees to leave them in my hands.
The issue with the valuation is that the trustees prefer to use property tax appraisals and the county has these houses appraised at boom values. This results in a chunk of faux equity that I would have to cover by paying more to the unsecured creditors. The county is reappraising, but the results won't be released until July.
Obviously I'm going to ask my attorney for his take. (If you've read my other threads, this is the attorney who is 100% BK, and owns rental properties himself.) But suddenly today, I think I have been overlooking the obvious: are they "mine" or "joint" with my wife?
Part of it is the nature of Arkansas law, and my background. So please let me give an excessive amount of information
- In 2005, my wife and I divorced.
- In 2006 I formed a single-member LLC (Arkansas) for rental real estate.
- In 2006, I bought houses “A”, “B” and “C”. I took out loans in my name only. The houses are titled under my LLC.
- In late 2006, my wife and I got back together. We did not remarry; instead we used an Arkansas statute to annul the divorce. Since at that point the divorce had "never happened" in Arkansas, my wife signed a warranty deed tranferring her interest in the houses to my LLC.
- Since the money to buy the rentals came from money I inherited, there is an understanding that they are “mine”, not “ours.” (This was necessary to sooth my mother’s VERY ruffled feathers... the divorce hurt her a lot.) My wife never invested a penny in the houses, although she has helped me work on them.
- From 2007 and 2008 we purchased houses “D”, “E” and “F”. The loans are under both our names, but the properties are titled under the LLC. Down payments came from my inherited family money.
- In 2010, I was able to refi houses “B”, “C”, “D” and “E” under the HARP 1.0 program. (This dropped my interest rates to 5.25%!) But to refi, the houses had to be returned from the LLC back to my name… and due to Arkansas law, my wife’s name as well. This means that houses “B” and “C” that I bought solo passed through her ownership. Once the refis were complete, the hosues were again warranty deeded to the LLC.
So my question… in preparing the forms I have been assuming these are “my” houses (and faux equity) because of the family history... keeping my wife at arm's distance. But I think that to the trustee… who doesn’t know the history (and probably wouldn’t care)… he would simply assume they are joint assets. If so, since my wife is not filing, the faux equity affecting my payback would be cut in half.
Am I thinking correctly here? Is it that simple?
Thanks, everybody!!!