My mother added me and my sister to her house deed, now I'm filing ch 7, problems?

[murphsmom]

Thank you for the excellent information. My fear is that there seems to be a couple of interpretations, and I'm not willing to take even the slightest chance of something happening. If someone could GUARANTEE that this won't be an issue, I would file. But what happens if it becomes an issue?

Here's an odd question. Can I file ch7, and if this becomes an issue, cancel my filing? Has anyone ever retracted?

The thing is, me being on the deed has NO MONETARY VALUE whatsoever. Even if my mother went into long term care anytime over the next 4 years, Medicaid gets the house, so I wouldn't even be a recipient of any $ for the next 4 years, unless she passed away during that time and we inherited it. But with that in mind, there are many people filing bankruptcy that will receive an inheritance "sometime" in the future, and the trustee can't claim that unless it's within the alloted time period, correct?

I just don't see how this could be considered an asset, as it's not worth anything to me, I can't sell it, I'm not making any $ off it..., etc... Let me make it clear that I really don't care about my future interest in this property right now. I would gladly lose my interest in the house to be able to dig myself out of financial hell right now. Then again, I simply will not take a chance that my 70 year old mother will in any way be affected by this.

I will just be way to nervous about this. I need a definite answer, and will continue to research this issue throughout the day.

Thanks for the great info!

[tobee43]

murphmom.......PLEASE listen to des...he is one of the BEST atty's on this forum. i would natch his advise up in a second and take it to heart and court. many really try and help, however, you need to filter through all the info you receive.

he was able to word this much better than i. once again we did, since our situation was a bit different listed it....didn't have to...as i pointed out, but wanted no stone unturned. this has to do with estate planning and NOT estate distribution.


thank you des....as usual VERY much appreciate the clarification...as it made no sense at all because this was not an estate awaiting distribution so why should there have been any interest of the house at stake.

[murphsmom]

I've found a couple of cases on line where the trustee auctioned off the "future interest" in the home. Ugh.

There really needs to be one clear answer to this question, I"m not big into taking chances.

"Over fifteen years ago, I was involved in a similar case, but one that yielded very different results. In my case, a gentleman came to see me after filing a pro se Chapter 7. He had filed the case to stop a payroll garnishment, and his total debt was around $100,000 – mainly credit cards. The problem he was facing had to do with his mother's home. Several years prior, his mother had added him to her deed for estate planning purposes. His mother continued to live in the home (which had no mortgage debt) and she paid the taxes and insurance. The mother's home had a fair market value of $200,000.

The Chapter 7 trustee ran a title search and found the real estate. The trustee wrote both the debtor and his mother to advise them that the trustee intended to sell the mother's house to liquidate the equity or that the mother could "buy out" the estate's interest by taking out a mortgage against the property.

The debtor came to me because he wanted to dismiss the case and to keep his mother out of the picture.

I looked at the Code section and saw that it gave the judge discretion to grant a motion to dismiss on the grounds of fairness, debtor's best interest and lack of harm to the creditor. I argued to the judge that it was fundamentally unfair to the mother to take her house and that the creditors (all unsecured) would be receiving a windfall because this debtor foolishly failed to seek counsel before filing Chapter 7.

The judge disagreed. She ruled that once the debtor filed Chapter 7, he gave up control of his estate and that by virtue of his title interest in his mother's house, he had equity in her real estate. We eventually settled with the trustee for slightly less than half the equity and the mother ended up taking out a mortgage on the property."

[tobee43]

one needs to remember that quoting cases is not always law....those cases can be challenged at any time.

also posting cases many times that are applicable, or seem to be relative, may not stand up in your court, or simply a judge may just overrule the case!! why.....because a judge can. just because someone sites a case they feel applicable to their situation does not necessarily means the judge listening to your case will agree with it. sounds nuts and is.

go with the statue Des listed...it IS the law.

[Pandora]

Thanks Des for clarification... I guess I was reading it as there was vested interest and known inheritance.

I'm still curious though how the trustee will forgo this property given the OP has rights to it.... seems to be several cases where it applies, then others where it doesnt. Is it district specific as to whether its claimed or not?

[debee]

I have a lot of respect and appreciation for Des too, but I am not convinced on this issue.

I get the whole bare legal title vs. equitable interest thing. Bare legal title is when your name is on the car, but you never drive the car, you never paid for the car, etc and the car is Mom's. The trustee can't go after it. The equitable owner of the car is Mom. Same if Mom adds you to the deed of the house with right of survivorship type thing. That's not what is happening in OP's case.

The issue for OP isn't bare legal title vs. equitable interest. A life estate is a different bird. The beneficiaries begin to accrue an equitable interest as of the date the deed is recorded. From then on, ownership of the property transfers incrementally in the form of percentage future interest, culminating with full transfer of the property to the beneficiaries upon the owner's death. OP has a contingent equitable interest that needs to be exempted or bought out (if it gets the trustee salivating).

That future interest has value and in OP's case, since the deed was just transferred and Mom is only 70, the amount will be small. That means it would not be difficult to exempt or buy back.

If it were me, I would be calling attorneys looking specifically for someone with experience in life estates and who has filed for remaindermen (OP) in NY before.

[Pandora]

I thought the same thing Debee - I posted what I did because I had heard of such things happening and wanted to ensure the OP knew what could possibly occur. However.... I'm not a lawyer so have to defer to Des / other lawyers who have experience in this area.

I hope it is as Des wrote... that would be awful if the trustee did what the guy in NY is enduring.

[despritfreya]

What this all boils down to is this:

1. Does the debtor want to run a risk that a greedy trustee will try to extort $? This is what appears to have happened in the quote listed by murphsmom @5:14 a.m. Normally, in situations where extortion is used, the parties settle as such would be cheaper than litigating. While I would much prefer the litigation path especially if I am 100% sure that my client has no equitable interest I cannot force my position on my client or the other party. I did have this happen once. Dad owned the home. Dad made all payments. Dad made all improvements. Dad resided in home. Home located in a different state. Debtor was on title with dad. Dad did not want to litigate and paid the Trustee $1,500.00 to go away. Since the issue was really dad's and we could not represent him, despite our urging dad caved. But, the $1,500.00 he paid was a darn sight less than what it would have cost him to litigate.

2. If debtor files a 7 and the Trustee is a jerk then debtor could convert to a 13 or 11.

3. If debtor wants to avoid the issue but still wants bk protection, don't file a 7. File either a 13 or 11. A 13 Trustee is not going to question it.

Des.

[Pandora]

*chuckling* Okay...I know not funny but for some reason Des's last post made me think of the Soprano's...

"Eh..wise guy eyyy.... gimme $1500 to make me go away..or you get it in the knees..."




Sorry.... LOL

[despritfreya]

One more thing. I checked PACER. In the Fleming case (the one Pandora listed though that wonderful newspaper called the NY Post - apparently it also hit Newsday). It appears that the Trustee attempted to extort $20K from the Debtor. The Debtor countered with $5k. That apparently was rejected however Mom offered $10k. The Trustee used mom's offer as the opening bid. There were no other bidders. The extortion cost mom $10,000.00.

To me this shows that the debtor and mom made a decision not to litigate as, but for the bad press and one letter filed by the debtor (not debtor's attorney), there was no opposition to the Trustee's efforts.

Des.

[Pandora]

How on earth is that legal Des? How - or better WHY - can a trustee be allowed to extort $ to essentially make him/her "go away". ?

That is just uncouth not to mention immoral..

[tobee43]

i have to chuckle as well. trustee's have been known to dip here and there and everywhere LOL!!! after all, it is the court system.

the truth of this situation is OP's mom would have to retain an atty and usually given the option of a buy out of the interest or the share at some point in the proceedings. that would cause poor OP's mom to dish out money for an atty and go through the bk courts via the trustee to claim or regain her interest in her own house. isn't that the way it could work, correct, des? (provided it EVER went that far and shouldn't???) however, this should be all mote, and the OP should get another atty that understand the statue that Des as supplied and apply it accordingly.

[despritfreya]

How on earth is that legal. . .? How - or better WHY - can a trustee be allowed to extort $ to essentially make him/her "go away". ?That is just uncouth not to mention immoral..

You hit the nail on the head but it happens all the time. Depending upon how aggressive the debtor, legal owner, or the attorney is, the outcomes do vary.

As to your point about a remainder interest. . . this may be unique to NY real property law but I see no difference in placing someone on a title as JTRS and, I think that in the Fleming case, the fact that there were no bidders is telling. Had the debtor and mom stuck to their guns. . .

Des.

[murphsmom]

I've decided. I'm not filing. Husband will file solo ch7 ASAP, and I will do my best to repay my creditor (one creditor, visa card & debt consolidation loan, totaling about $22,000 in debt right now). I'm one payment behind right now, as I thought we'd be filing together, and don't have the $ for the payment due, so will be calling them to let them know they will be receiving payment asap.

Thought about filing a separate chapter 13, but then read that I can't file it simultaneously while my husband files ch7. So, will wait to see the outcome of his ch7, then decide from there.

Wondering if just putting myself on a strict 5 year payment plan to pay off my $22,000, rather than filing at ALL, is the best option.

I feel like we're bleeding out money, it goes so fast. Hate this economy. Hate my husbands job loss. Hate the expenses we all have to endure.

[tobee43]

i hear you...but that at least sounds like a "plan" and may i suggest just one other thing for your future.

if you mom is now out of "danger" get your name off the deed now, just in case you have to file in the future. if you get it done, at least if things change and you have to file down the road you will not run into the same problem.

and, you may want to wait and file for the 13 and get some of the debt down hopefully, and, or later on go for a 7 if things get worse. but, i hope and pray for you they will get better. if nothing else, it sounds as though you are sorting and planning. that's a good thing.

make sure you keep in touch!!!