Questions and advise after free consultation with lawyer

[steven22]

well... this is for my parents... they have been strugling for a year now because of a business they decided to get and it went upside completely... more about it in this thread

http://www.bkforum.com/showthread.php?p=207482#post207482

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they went to their first lawyer and had a free consult. The lawyer said that he cant do a chapter 13 with my parents because my mom has a steady paying job.

he did say that he can get a chapter 7 and that our house is protected under florida homestead

BUT... my parents have a 3unit apartment that is being rented out... and have had it for 10 years on a $250k mortgage from 10years ago.

my parents dont want to lose that, we are making regular payments and it generates some income because the apartments are being rented out.

the lawyer said that we need to get it appraised and if the appraisal exceeds $250k , we need to pay the difference to the state in order to keep it.

is there anything we can do to go around this?... my parents will lose their only other income aside from my moms job.

and we had kept it for 10 years, it is worth much more than $250 right now.

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aside from that, they own 2 cars and the same applies for the 2 cars, get it appraised and if its over $1000, they have to pay the state the difference or forfeit the cars. (they are owned, not loan)

My dad wanted to transfer all the title/ownership to my name and have me "own" the cars to protect it. it may be unethical but is this illegal?

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pretty much all my parents are trying to relieve themselves from is the debt caused by the business which is a 300k lease and 50k creditcard bill. (including the net loss of 5k that it generates every month)

any help?

[JRScott]

Do not transfer any property from their name to yours or anyone else's unless said person pays fair market value for the property. If you do transfer without fair market value being received then the Trustee can and will undo any such transactions.

The car limit in Florida is indeed 1000 dollars and thus what the lawyer told you is correct.

Assuming the home and the apartments are two separate entities then you could only claim the homeowners exemption on one of them the one they live, and yes in a Chapter 7 you'd have to repay the difference to the court to keep the other.

I'm assuming they personally guaranteed the business debt?

It is possible that their property is of such value that in a chapter 13 they would have to do a 100% payback and that could be what the lawyer is looking at. The creditors have to receive as much as they would receive in a Chapter 7 in a Chapter 13 by law. With recent drops in property values though it is possible the property is not worth as much as you think so I'd get some appraisals.

I'd also see 2-3 more lawyers before making a decision.

[steven22]

Do not transfer any property from their name to yours or anyone else's unless said person pays fair market value for the property. If you do transfer without fair market value being received then the Trustee can and will undo any such transactions.

The car limit in Florida is indeed 1000 dollars and thus what the lawyer told you is correct.

Assuming the home and the apartments are two separate entities then you could only claim the homeowners exemption on one of them the one they live, and yes in a Chapter 7 you'd have to repay the difference to the court to keep the other.

I'm assuming they personally guaranteed the business debt?

It is possible that their property is of such value that in a chapter 13 they would have to do a 100% payback and that could be what the lawyer is looking at. The creditors have to receive as much as they would receive in a Chapter 7 in a Chapter 13 by law. With recent drops in property values though it is possible the property is not worth as much as you think so I'd get some appraisals.

I'd also see 2-3 more lawyers before making a decision.

I dont understand... one of his cars is worth about 10k bluebook and he already paid cash and bought that car a year ago. the lawyer said that unless he pays the market value minus 1000 ($9000) . he will lose the car.

which means that he will be spending another $9000 to keep his car. if he "sold" the car to me, and have it titled under my name and registered under my name wouldnt he be free paying anything for the car?

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about the business debt, most of it is through equipment that was leased. if the leasing company repossessed their machines, most of the lease would be repaid.

aside from that, the only other debt is credit card debt. the other assets in the business could repay most of that credit card debt if turned liquid.


does this mean they will still take the apartment if it gets appraised over 250k (mortgage amount) under ch 7?

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[JRScott]

Yes if the cars value is over the exemption value in order to keep it he would have to pay the trustee the difference. If the car is valued at 10k, you would have to pay him 10k in any transfer of the car or the Trustee could consider it an inside trade, at best he'd just undo the trade and seize the car anyway, at worst he could consider it bankruptcy fraud and hiding of assets.

I can't be sure about the apartment but yes that is a possibility, unless they can afford a payback for it. If they tried to transfer to your name, same as the car, unless you could give them fair market value and did so the Trustee could undo the transaction.

[TEW]

Steven
And you are going to give the trustee 9 K ?

[steven22]

at first i wasnt going to give him money and have him gift it to me.

but then after doing research, I was going to give him some money to show that it was sold to me..... but not 9k


this still matters even before we file for bankruptcy?... a trustee can undo transactions that were made while all the assets are still in our posession?... because we are still researching everything and have another lawyer to go to ... dont plan on filing for a few weeks at the least.


we also have a bit of assets in the business that they we were going to keep in a storage unit (under my name) and try to sell it off. same questions apply for these. the assets are worth about

[steven22]

Yes if the cars value is over the exemption value in order to keep it he would have to pay the trustee the difference. If the car is valued at 10k, you would have to pay him 10k in any transfer of the car or the Trustee could consider it an inside trade, at best he'd just undo the trade and seize the car anyway, at worst he could consider it bankruptcy fraud and hiding of assets.

I can't be sure about the apartment but yes that is a possibility, unless they can afford a payback for it. If they tried to transfer to your name, same as the car, unless you could give them fair market value and did so the Trustee could undo the transaction.

no they cant afford a paypack.... but are they allowed to take out a another loan on it?... say towards the the house we live in.... so that the mortgage will end up being the appraisal value or something?

[steven22]

edit

[TEW]

at first i wasnt going to give him money and have him gift it to me.

but then after doing research, I was going to give him some money to show that it was sold to me..... but not 9k


this still matters even before we file for bankruptcy?... a trustee can undo transactions that were made while all the assets are still in our posession?... because we are still researching everything and have another lawyer to go to ... dont plan on filing for a few weeks at the least.
they can go back a couple of years and look. Yes they can Seize assets that were thransferd thats not undoing thats TAKEING

we also have a bit of assets in the business that they we were going to keep in a storage unit (under my name) and try to sell it off. same questions apply for these. the assets are worth about
chapter 7 is asset BK thats the idea the trustee can take them to pay the creditors

Steven it’s NOT a good idea to try to hide, move, transfer any asset. That includes cars money or anything else of value.
The trustee can even reopen a closed case if they find something. These guys are not dumb. AND they have seen it all.. If parents file do what the lawyer tells you to. Doing things that you are suggesting are fraudulent transfers and you could get your parents case dismissed with prejudice. Then they would have to wait 8 years to file again.

[Phillymanhere]

Steve,

Just to be clear: Of course they can go back and examine transactions before you filed. Of course! How else would they figure out who's gaming the system?

What the trustee is trying to do is prevent people from abusing the system. The trustee wants to tag those folks who knew they were going to file for bk and then took steps to exploit creditors (in other words borrowed money they knew (or should have known) they wouldn't be able to pay back).

Taking steps to hide assets or minimize assets so that you won't have to list those assets as part of a bk filing is the same thing. I know this is probably new thinking to you, but once you consider it, it will start to make sense.

Consider it this way: the government wants to make sure people with assets use those assets to pay off creditors to the degree possible. So taking a car, etc., is simply the trustee's way of forcing you to pay something you can afford to your creditors. The trustee would seize the asset (a car or whatever) and turn that money over to creditors.

If they didn't look back at actions prior to the filing, you would have millionaires borrowing millions from banks or whatever and then transferring that money to their kids' names, and then filing bk, claiming they had no money. We couldn't have a financial system where that kind of trickery is allowed (though of course in some ways we do have such a financial system, as recent days have shown--but that's another story).

The law has to look at actions prior to filing or else it would invite massive corruption and abuse of this sort.

[StartingOver08]

Just to add to Phillymanhere's post: The Trustee has the right to "look back" on your parents transactions for a minimum of one year. In fact, many times you (or your parents) will have to provide bank statements for two years, cc stmts for 3 yrs, real estate transactions for 10 yrs, and tax returns for 4 yrs etc.

The Trustee represents the CREDITORS. The Trustee is looking for $$$. The Trustee is also looking to see if your parents have done any sort of fraudulent transaction - at any time leading to the BK. Your parents have to provide this information, under oath.

Do NOT take any sort of chance by hiding, moving, transferring anything.