Inherited house in probate

[ImLoki]

Hi everyone, I filed for chapter 7 on 3/3/20, I'm inheriting 1/3 of my mothers house. Short background, my mother died on 1/19/18, her estate consisted of her house and about $40k of debt. We were advised that to keep the house we'd need to pay off the debt before it went court. We made deals with the credit card companies and paid all her debts off, so now the house is free and clear.So now it's being handed over to the court. But because I was honest and put it down on my filing the trustee wants to take the house to pay off my debts. I've lived in the house since 4/1/18 and there is a homestead exemption here in NY for $170k, the house is worth about $300k so my portion is $100k. It was all writen up on my filing, can the Trustee still take the house?

[bkandhappy]

Long term member here but lost account in the hack!!

with that said, the trustee dont give a squat about nothing but assets and they dont care where it came from or what it is used for. With that said yes the trustee can take the house. They will sell the house, give you your exemption amount of but i would think that they would only give you 1/3 of the $170k not the full 100% of the $170k and your 300k value (your $100k) and use the proceeds from the house to pay your creditors. you may be able to buy back the equity but every trustee is different.

but in the short answer house is gone, you get I think would be $56100 (30% of the exemption amount) and the rest after 8-10% commissions goes to your estate.

Someone who knows more about probate can chime in and correct me if i am wrong.

[justbroke]

Hi everyone, I filed for chapter 7 on 3/3/20, I'm inheriting 1/3 of my mothers house. Short background, my mother died on 1/19/18, her estate consisted of her house and about $40k of debt. We were advised that to keep the house we'd need to pay off the debt before it went court.

I am shocked you received that advice (from a bankruptcy attorney) prior to going into a bankruptcy. It's not so-much that the Trustee doesn't care, it's that the BK code doesn't provide protections for all property.

What will matter is how the home is currently titled and what rights do you have in this inheritance. If you say that you were to get 1/3rd the value, then the BK Estate (prior to any exemptions) has 1/3rd the value of the home. If no one can buy out your BK Estate's 1/3rd, then the Trustee can and will force the sale of the home on behalf of the BK Estate.

Whether or not your homestead applies and to what amount will be interesting. The question is, whether you may only be able to protect 1/3rd of your $100K equity.

We made deals with the credit card companies and paid all her debts off, so now the house is free and clear.So now it's being handed over to the court. But because I was honest and put it down on my filing the trustee wants to take the house to pay off my debts. I've lived in the house since 4/1/18 and there is a homestead exemption here in NY for $170k, the house is worth about $300k so my portion is $100k.

The homestead exemption will likely be the both the thing that protects some or all of your equity, or the thing that the Trustee argues should only allow you to claim 1/3rd (33%) of the $100K. Your BK attorney will need to get on top of that and try to learn what the Trustee is thinking or wants.

It was all writen up on my filing, can the Trustee still take the house?

The Trustee can ask the court to sell the property free-and-clear in order to get at the equity which is part of your (personal) BK Estate. Southern NY State has the $170K+ exemption, but most other counties in New York only have about an $82K exemption. I think married can double, but you still may run into the issue of whether you're entitled to the full exemption.

Is the home still in probate? Was the title corrected/changed to have the three survivor's names?

[ImLoki]

My brother is a court officer, and part of his complex is the surrogate court, and the people their gave us the info, settle debt or the house gets sold. The house is still in probate (no will ) The courts shut down because of covid-19, still not open yet. So my name isn't on the house yet. My brother is executor and can he put the house in a trust? Can I switch to chapter 13, hoping creditors will take 15% or so, that money I can come up with. would that save the house?

[ImLoki]

oh, all my debt is unsecured debt. Midland funding owes 2 of my credit accounts now and sued me, after going back and forth in court their lawyers were so incompetent, that they (Midland) dropped both cases with prejudiced.

[justbroke]

My brother is a court officer, and part of his complex is the surrogate court, and the people their gave us the info, settle debt or the house gets sold.

This is usually a good idea unless one of the benefactors files for bankruptcy in the middle of probate. Then it gets messy, as you can see.

So my name isn't on the house yet. My brother is executor and can he put the house in a trust? Can I switch to chapter 13, hoping creditors will take 15% or so, that money I can come up with. would that save the house?

(I say this from some experience with property, living estates, and probate, personally.) The problem is that if there's a Will then the Will should prevail. Since this is still in probate, the Trustee can just wait out probate and still demand the sale of the property at a later date. The Chapter 7 Trustee would keep the case open until probate completes.

Even if you put it in a Trust, the Trustee steps into your shoes (as Trustee of your BK Estate). The Trustee would do nothing differently if it were in a Trust than if it were just some sort of ownership by joint tenancy. The problem is that you have an inheritance (subject to probate) that is property of the bankruptcy estate simply by operation of law.

A Chapter 13 won't help you because you would have to pay the "Chapter 7 liquidation test" value of the property. So, if we say the value is $100K and you could only exempt $33K of it (1/3rd), then you may be looking at a Chapter 13 where a minimum of $67K must be paid. In that case, that may exceed your personal debt and put you in a 100% plan. However, it would keep the Chapter 7 Trustee from forcing a sale.

oh, all my debt is unsecured debt. Midland funding owes 2 of my credit accounts now and sued me, after going back and forth in court their lawyers were so incompetent, that they (Midland) dropped both cases with prejudiced.

So do you or do you not have any debt, and how much is this (unsecured) debt? Did you file with an attorney? Hopefully your attorney is talking to the Trustee to try to see what they want. If you filed as an individual (Pro Se), then you may want to get some bankruptcy advice from a NY bankruptcy attorney. I don't know any specifics about how the homestead exemption would apply (would you only receive 1/3rd since you only have a 33% interest in the property). I don't know if the Trustee is pressuring you because you are not represented.

In either case, the Trustee sees a juicy asset and wants a piece of it.

[despritfreya]

I wasn't going to post to this topic because most of what I would have said is already covered. I do want to add three items:

1. OP needs to get a bk attorney as it appears he/she does not have one.

2. The Trustee has 30 days from the 341 to object to a claimed exemption. Assuming OP claimed his "interest" in the home exempt on Schedule C, has an objection been filed and, if not, is OP beyond 30 days from the 341? (COVID may have delayed the 341 so maybe we are not beyond 30 days.)

3. No one has asked about "who" paid off mom's debt. Did it get paid by her assets? Did it get paid by a family member other than OP? Did OP contribute? If OP contributed we have an additional issue for the Trustee. . . a fraudulent conveyance.

There are many problems here and I do hope OP has a good attny.

Des.

[ImLoki]

The 341 meeting was done by phone on 4/8/20 as scheduled, and at the end was adjourned to 4/22 because the trustees lawyers hadn't gotten information on the house yet. All info was provided by me before the meeting, but they sent a request to my brother the executor 2 days before the 341 meeting. The trustee never has objected to the exemption.

My borther , sister and I paid the debt to save the house in probate, the estate had no funds to use.

[justbroke]

Did you file on your own (Pro Se)? Do you have access to PACER and if so, have you been keeping up on anything that has been filed on your docket? Was your 341 meeting "concluded"?