Sale of house days prior to filing....

[PoorGrammyinBK7]

This is a hypothetical question - don't even know if it CAN happen, have not asked the lawyer or anyone who might possibly be able to help us in this way - but we do have contacts who are well-off enough to do it.

The question is: What if you could get a friend or relative - or any investor - to buy your house (at market value - no profut involved) before you file a 7 (or even a 13), so that your 1st and 2nd mtg could be paid off? Then they could maybe rent it back to you - for the going rate of rent of course. Or you could rent somewhere else. (We just want out of the house really).

Is this against any bankruptcy law? Seems to me like it would get the house debt off the table and leave only the others. Would it matter if it were a relative or friend as long as they pay market value?

Any thoughts or particular knowledge on this??

[BK2008]

I kniw that if you're going to sell it, do it before you file BK. You will have to disclose the sale (one of the questions is: have you sold property in the last 12 months)

After that, you will not be able to without trustee permission. And if you end up walking away with some cash, they might just want that, too.

I've explored thay option, and this is what the attorney tells me.

[TomBrady]

I dont know of any reason why that would not be allowed as long as you disclosed the sale, if you made money off the sale the trustee may ask you what happened to the money but that would be the extent of it. Of course that is assuming that the house was sold at FMV, if you sold it for say $1 now that would be an entirely different question. That would get you in big trouble.

[PoorGrammyinBK7]

We owe about what its worth. Actually, its is even possible we owe MORE than what its worth in the market today.

[keepmine]

Why would you want to do this? There is no equity in the property and you still have a housing expense.
Plus, if your benefactors don't properly record the lein in the required timeframe, the trustee can snatch the property back.
A very good rule to follow is, don't make unnecssary property transfers on the eve of bk and for heaven sakes, don't involve others in your financial problems.

[PoorGrammyinBK7]

NOT going to do it

Just wanted to be free of the house so we could move if we wanted to (had planned and talked about that way before this mess ever came up, but never tried to sell the house) - but we are NOT going to do it.

The lawyer says it would cause a red flag and could get us into a lawsuit or something if the trustee were to question it and decide to challenge the Fair Market Value (even though I know it is worth less or approx equal to what we owe - hardly any chance at all it is worth more - and if so, not much).

So that idea is out - would not have done it anyway without asking the lawyer first. I really see nothing wrong with it though.