House owned by trust. How to list on forms?

[tobee43]

avengers, des is one of the best attys i have ever met, his/her advise is to be well yielded; (for your sake as des ROCKS with the letter of law) as it is normally 200% smack you in the face correct. while des example was from a calif case. i understand there is a difference of law between all states, but you must understand while you file state, remember, the good ole USA trustee from the federal government is also watching.

[Pjmax]

Avengers, i don't know much about your total situation, but now may not be the best time for you to file. I know your car may be repo'd soon, and you owe the IRS, but what other debts do you have that you are hoping to discharge, and why the rush to file now? Filing BK now won't help the lack of income situation. It's usually advised to file, when you are fairly sure that going forward you'll be on solid ground. It may be better to file after you find employment.

If you could give some more info about your situation, you'll get lots of expert advice on how to get through this.

I would still interview prospective attorneys. It sometimes takes a while to find the right one. Be sure and ask for a breakdown of what the fee will and won't include, what will be extra, etc. This is extra important for you since you have a tricky trust issue. Some attorneys have payment plans, but you usually need to be paid up before filing. I know it seems like a lot of money, but as Des pointed out, fixing a bad BK is waaay more expensive. You can always get another car of some kind.

[avengers]

Avengers, i don't know much about your total situation, but now may not be the best time for you to file. I know your car may be repo'd soon, and you owe the IRS, but what other debts do you have that you are hoping to discharge, and why the rush to file now? Filing BK now won't help the lack of income situation. It's usually advised to file, when you are fairly sure that going forward you'll be on solid ground. It may be better to file after you find employment.

If you could give some more info about your situation, you'll get lots of expert advice on how to get through this.

Not sure what kind of info you need, but here's some more.

Total debt is $93k, of which school loans are $26k (the BK atty I had the initial consult with told me it's basically impossible to get this discharged--the only case he was aware of where even a partial school loan discharge happened is when an attorney became fully paralyzed). The car loan is $25k, the car is worth about $17k (blue book), so I assume that, once they repo the car, I'll still be on the hook for about $8k.

I'm not necessarily in a rush to file now. It's just that, as of March 1, I finally pass the means test, so I hadn't even been thinking about the details of BK until now. But now that I am actually eligible for BK, I thought I should start asking questions. The main benefit of filing now is that I stop getting those stupid calls from the creditors. They are calling every day now. I ignore them usually, but it's still annoying when I accidentally answer.

That's actually another thing I didn't like about the attorney I met with, he seemed to really push filing as soon as possible. I met him in November, just after I lost my job. And he was insisting that I could pass the means test by showing my expenses > income and I should file now. I wanted to wait at least until March (to pass the means test for real) or April 16 (to make my IRS debt dischargeable). I was also worried because our family spent a lot of money in October (a pre-planned vacation) before I found out I would lose my job and didn't want those debts to be challenged by credit card companies. He just insisted that he had never seen a credit card company challenge a debt. I wanted to wait at least 90 days to prevent the presumption of fraud.

Because I'm living in a rent-free house, have unemployment insurance and food stamps, and my wife has a temp job, we're not in danger of being in the streets or starving. The summer is going to be tough for several reasons. 1) my wife's temp job is substitute teaching, which does not exist in the summer; 2) my unemployment insurance runs out at the end of May; and 3) we live in AZ where my electric bill is $80/month now, but it will quadruple in the summer, just when my wife stops working and my unemployment insurance stops.

I'm a lawyer (not a BK or estate lawyer, obviously ), but it's a niche specialty where it seems nearly impossible to find a job. And since the downturn has created a glut of attorneys, there are dozens of people competing for every opening that does exist. I had an interview last week and was hoping it would turn into something positive, but they rejected me. I had two other companies express an interest in me two weeks ago, but they have never followed up despite my prodding, leading me to believe they are no longer interested in me.

I've been trying to get non-attorney jobs, but I run into problems there also. The only qualifications I have are for my niche specialty in law. Literally the only other thing I am qualified to do is secretarial work (I type 70 wpm and have excellent MS Office skills). But for obvious reasons, no one is going to hire a lawyer to be a secretary. Generic retail employers shun me for the same reasons--they assume I'm just going to leave as soon as I get a job as a lawyer. And they are right. I can't even get a pizza delivery job because my car can be repo'd any time.

[despritfreya]

. . . the other option may be to have the other siblings buy out the OP share prior to filing or stop and not file until this resolved?

I do not think such is necessary. It sounds like it is a no brainer to complete the final distribution and put the property in the name of the three beneficiaries. Once that happens hopefully all will be right with the world and OP can properly claim the homestead exemption since OP resides in the home. But, as an additional item, while the home will be owned by three people, what is the current value of the home? OP needs to make sure the value is within the allowed exemption. Since a Chapter 7 Trustee can sell both the estate's interest and the interest of a co-owner, one needs to look at all the ways value can be split between the three with consideration of the exemption.

My other concern here is that OP has no mortgage. In a later post (above) he indicates that he is currently unemployed and therefore now qualifies for the 7 because, I presume, he and his wife are below median income for a family of there size. However, OP needs to understand that being below median income is only half the problem. Since he has no mortgage payment I have to wonder if he has a positive cash flow when filling out Schedules I and J. OP. . . have you looked at this issue?????

Des.

[avengers]

I do not think such is necessary. It sounds like it is a no brainer to complete the final distribution and put the property in the name of the three beneficiaries. Once that happens hopefully all will be right with the world and OP can properly claim the homestead exemption since OP resides in the home. But, as an additional item, while the home will be owned by three people, what is the current value of the home? OP needs to make sure the value is within the allowed exemption. Since a Chapter 7 Trustee can sell both the estate's interest and the interest of a co-owner, one needs to look at all the ways value can be split between the three with consideration of the exemption.

My other concern here is that OP has no mortgage. In a later post (above) he indicates that he is currently unemployed and therefore now qualifies for the 7 because, I presume, he and his wife are below median income for a family of there size. However, OP needs to understand that being below median income is only half the problem. Since he has no mortgage payment I have to wonder if he has a positive cash flow when filling out Schedules I and J. OP. . . have you looked at this issue?????

Des.

The house is well under the exemption amount. Zillow says it's worth $132k, so my share is about $43k.

I actually haven't looked at the cash flow yet. As I said before, since I was above the median until today, I couldn't even think of filing BK, so I did no serious research. I had thought that they don't even look at cash flow if you are under the median. But since you're asking the question, I guess I was wrong. The guy I had an initial consultation with seemed to think it would be no problem meeting the cash flow test even when my 6 month income contained full employment, so hopefully I don't have much to worry about.

My income is low. As I said above, my income is solely food stamps and unemployment (and, in case you didn't know, AZ has among the lowest unemployment payments in the nation: $240/week). My wife is a substitute teacher who's income has ranged from $400/month to $2000/month depending on how many jobs she gets. As per form 22A, my 6 month avg income is approx $4000/month now and will be approximately $2400/month (depending on how many jobs she gets in March/April) once the last two months of my employment drop out of the calculation.

[avengers]

Also, even if I can't show my cash flow is negative in March or April, I'll definitely be able to show it's negative in June, as my wife stops working completely and I lose my unemployment insurance. Income will then be $497/month.

But I did a rough estimate of my schedule J expenses (using national expense standards for some numbers). Came out to $2074/month. This isn't perfectly accurate (for one, I based it off of my current auto insurance rates, which is going to go down significantly when I replace my 2-year old car with a 12-year old car, or whatever I'll be able to afford). I won't have any problem showing a lack of cash flow.

[tobee43]

I do not think such is necessary. It sounds like it is a no brainer to complete the final distribution and put the property in the name of the three beneficiaries. Once that happens hopefully all will be right with the world and OP can properly claim the homestead exemption since OP resides in the home. But, as an additional item, while the home will be owned by three people, what is the current value of the home? OP needs to make sure the value is within the allowed exemption. Since a Chapter 7 Trustee can sell both the estate's interest and the interest of a co-owner, one needs to look at all the ways value can be split between the three with consideration of the exemption.

My other concern here is that OP has no mortgage. In a later post (above) he indicates that he is currently unemployed and therefore now qualifies for the 7 because, I presume, he and his wife are below median income for a family of there size. However, OP needs to understand that being below median income is only half the problem. Since he has no mortgage payment I have to wonder if he has a positive cash flow when filling out Schedules I and J. OP. . . have you looked at this issue?????

Des.

i still believe it could be a potential problem, even with the three other names on the deed. only because of the "timing". i know here in florida when filing you must disclose any such transaction with 2 years of said filing date. since OP could or would do that now, i believe many trustees will take a closer look at the situation and require more inquiry into this situation. des, as you have pointed out, no rent, no mortgage, the partial exemption on OPs home or share still may be in question since he and his immediately family members enjoy the full value of the house. now if he paid rent to them....that may help. additionally, this house does not sound like it's sitting in probate the trust distribution has already been distributed from what i have read on this thread, there for it's a sitting duck, like owning property with others and no trust protection at all.


avengers, we owned property with another family member. we made certain, prior to our filing, they hire attys and brought out share. leaving no assets we should have to claim. understanding a bit about bk, we had them buy us out almost two years before we filed. when i felt it "safe" we filed and i had to list the property since we were shy of the two year mark by a week and the petition was accidentally submitted by the firm too early, it just under that two year there one must be as honest as the day they were born. so i had to in good faith list it. i had the pull back the petition to amend it. (what a mess) the situation was scrutinized heavily, as they were prepared to sell the property and of course the other family member was to be paid first but the trustee was entitled to our share. in out case the place was underwater completely. however, i needed to protect the other family member the best way i could, and that was to make certain our names were removed from that deed. we were an NO asset 7, and that place even tho underwater still peeked the trustee's interest. all of our income was exempt, however, that didn't stop the trustee from carefully looking into the situation. the result in our situation was the trustee didn't feel it was worth it. although nowadays the trustee here even send out people to examine one's assets in their homes. our district really was out of hand for a while, an endless pot of gold to and for trustees.

i will never in my life forget the story of one person on this forum , a chapter 7 no asset case, who owned an old trailer. well, the trustee sent someone out to inspect all assets in the home and found the trailer and decided it had value. it went to auction and the sold for less than 2k of it's worth. unreal.

i have learned many times over hearing story and story hundreds, many even thousands at this point, it is the luck of the draw with whom you get as a trustee, and if you get the local heavy, they hit their nose into you and hit hard. just be cautious!

i wanted to comment about your saying you can't get a job. i know it's really difficult now, and one needs to think outside the box, also since you have a law degree, there are many opportunities out there as legal council for companies, non profit orgs, etc. shoot my sister didn't practice a day in her career. but worked for a major university as legal adviser and not only made an excellent living, but a very incredible career. i remember i wanted to be an advocate for green peace! since you have your jd, there are many other types of positions that your degree may benefit you. my best friend, an atty here, doesn't even practice she teaches at the university law school paralegal program, and some law classes. again, one sometimes needs to think outside the box. many large firms closed up during this economy, i saw it happen all the time .

[avengers]

Avengers, i don't know much about your total situation, but now may not be the best time for you to file. I know your car may be repo'd soon, and you owe the IRS, but what other debts do you have that you are hoping to discharge, and why the rush to file now? Filing BK now won't help the lack of income situation. It's usually advised to file, when you are fairly sure that going forward you'll be on solid ground. It may be better to file after you find employment.

I've seen different advice about this. Some say that, since a BK filing is a snapshot of the day you file, you can file up to the day you start working and you'll be fine. Others say that depends on the new job.

What about schedules I and J? Even though I list current income, I'll have to disclose a foreseeable increase in income. And, if I get one of the jobs I'm trying to get, it will be a significant increase in income (every job I'm applying for pays over $8k/month). Won't a trustee look at $2k/month expenses and future $8k/month income and say, "no way"? I'm not close to getting one of those jobs, so maybe I shouldn't worry about this. But shouldn't I keep this in mind?

[justbroke]

A future job is not a job (period). When looking "forward" you can only do so with what is in your hands. For example, you may already be employed but have had underwithholding each year; causing a tax due upon file a tax return. Your Schedule I&J would have your actual deductions, but you might write that your future tax amount may increase to cover this shortcoming.

Again, a future job is not a job. You can't "speculate" on what job you might have or what income you might have. The future look is based on all things being equal today and with the discharge of the unsecured debt, what your situation would look like.

[Pjmax]

I've seen different advice about this. Some say that, since a BK filing is a snapshot of the day you file, you can file up to the day you start working and you'll be fine. Others say that depends on the new job.

What about schedules I and J? Even though I list current income, I'll have to disclose a foreseeable increase in income. And, if I get one of the jobs I'm trying to get, it will be a significant increase in income (every job I'm applying for pays over $8k/month). Won't a trustee look at $2k/month expenses and future $8k/month income and say, "no way"? I'm not close to getting one of those jobs, so maybe I shouldn't worry about this. But shouldn't I keep this in mind?

Your concerns makes sense to me. Timing can make all the difference, that much I know. I will defer to the experts to comment on this. You've been getting advice from the best, I'm sure they will be back.

I do wish you the best on your job search. Since the 2008 job tsunami, I was un or under employed. I'm now working in a completely different field than I did for over 30 years. The most difficult part of it all is getting one's brain on board with starting over without being bitter. It has helped a lot being on this forum, and knowing I'm not alone.

[avengers]

A future job is not a job (period). When looking "forward" you can only do so with what is in your hands. For example, you may already be employed but have had underwithholding each year; causing a tax due upon file a tax return. Your Schedule I&J would have your actual deductions, but you might write that your future tax amount may increase to cover this shortcoming.

Again, a future job is not a job. You can't "speculate" on what job you might have or what income you might have. The future look is based on all things being equal today and with the discharge of the unsecured debt, what your situation would look like.

I was referring to Pjmax who suggested I wait until I get a job to file.

In that situation (after receiving a job offer but before starting) I suppose that, technically speaking, they could decide to rescind the offer before I start. But still, question 17 of schedule I says, "describe any increase or decrease in income reasonably anticipated to occur within the year following the filing of this document." If I have a job offer in hand and fully expect to start a job on Monday, can I still file schedule I on Friday without mentioning that I just accepted a high paying job? Do you really expect me to go to a 341 meeting and tell the trustee that I didn't mention it because of the possibility of them rescinding the offer?

[LadyInTheRed]

avengers, we owned property with another family member. we made certain, prior to our filing, they hire attys and brought out share. leaving no assets we should have to claim. understanding a bit about bk, we had them buy us out almost two years before we filed. when i felt it "safe" we filed and i had to list the property since we were shy of the two year mark by a week and the petition was accidentally submitted by the firm too early, it just under that two year there one must be as honest as the day they were born. so i had to in good faith list it. i had the pull back the petition to amend it. (what a mess) the situation was scrutinized heavily, as they were prepared to sell the property and of course the other family member was to be paid first but the trustee was entitled to our share. in out case the place was underwater completely. however, i needed to protect the other family member the best way i could, and that was to make certain our names were removed from that deed. we were an NO asset 7, and that place even tho underwater still peeked the trustee's interest. all of our income was exempt, however, that didn't stop the trustee from carefully looking into the situation. the result in our situation was the trustee didn't feel it was worth it. although nowadays the trustee here even send out people to examine one's assets in their homes. our district really was out of hand for a while, an endless pot of gold to and for trustees.

Avenger's situation is completely different. Your statement of financial affairs showed a transfer to an insider. I assume you didn't have an exemption to cover the value of the property you transferred (if there were equity). It made sense for the trustee to look into the transfer and the value of the property you transferred to make sure there wasn't something there for the creditors. I'd say he wasn't doing is job if he hadn't investigated. The entire property Avenger owns an interest in is worth less than the AZ homestead exemption. If he distributes the property to the beneficiaries, then he should not have a problem claim a homestead exemption on his 1/3. If the trustee wants to investigate, that really is not something to worry about as long as Avenger is confident that his 1/3 interest is worth less than the homestead exemption.

[LadyInTheRed]

I've seen different advice about this. Some say that, since a BK filing is a snapshot of the day you file, you can file up to the day you start working and you'll be fine. Others say that depends on the new job.

Yes, it's a snap shot on the day you file. So, if you are about to accept a job you were offered, it should probably be included on Schedule I/J. But, it has to be a certain thing. If you file your petition and then the next day get a call offering you a job, that shouldn't be a basis for objecting to a discharge. That doesn't mean the trustee or a creditor won't object, but you should be able to defeat the objection if they can't prove that you knew on the date of filing that you would get a job offer, accept the job and start work. It's all about whether based on the facts as they exist on the date of filing, seeking a chap 7 discharge is an abuse. See 11 USC Section 707 and read some articles about totality of circumstances objections under 11 USC 707(b)(3).

Whether to wait until after you are employed is a hard call. If you file Chap 7 and don't find a job soon you can quickly find yourself back in debt without Chap 7 as an option. A Chap 13 isn't the end of the world and may be a better option than filing Chap 7 before your real problem (lack of income) is solved. If you filed a Chap 13 immediately after getting a job, you would have a 3 year commitment period instead of 5 years if your below median the 6 months before filing.

As I said before, since I was above the median until today, I couldn't even think of filing BK,

As the attorney tried to tell you, that's not true. Being under median is only the first part of the means test. If you are above median, you complete the rest of the means test. Many over the median filers pass the means test.

I had thought that they don't even look at cash flow if you are under the median. But since you're asking the question, I guess I was wrong.

Even a below the median filer can get an objection based on totality of circumstances. Somebody who pays very low or no rent or mortgage or show other very low expenses on Schedule J can be vulnerable.

But I did a rough estimate of my schedule J expenses (using national expense standards for some numbers). Came out to $2074/month. This isn't perfectly accurate (for one, I based it off of my current auto insurance rates, which is going to go down significantly when I replace my 2-year old car with a 12-year old car, or whatever I'll be able to afford). I won't have any problem showing a lack of cash flow.

While national standards can be a good guide for determining what may draw the trustee's attention, it is not support for your expenses if the trustee asks questions. If you have no mortgage or rent and you expect that to continue, your expenses for mortgage or rent is zero. If that is an issue, you could enter into a lease with your siblings where you pay them 2/3 of the fair market value rent. Don't forget to include your share of maintenance expenses on Schedule J.

[AngelinaCat]

Folks, ALL of you are getting long-winded and overly long with your posts--even if you DO break them up with a line of white space in between paragraphs.

For that I thank ALL of you very much. But PLEASE consider making your paragraphs smaller. Please also consider using a spell-checker AND grammar checker, and then re-read and go over it again before you posts. Some of the posts when read, just do not make sense.

Sorry to nit-pick on this, but I have tried to go through this thread--I would like to help. But I an make no sense of where to start from what I am reading (and cannot read or follow.)

Thank you

AC

We need an emoticon with spectacles.....

[tobee43]

Avenger's situation is completely different. Your statement of financial affairs showed a transfer to an insider. I assume you didn't have an exemption to cover the value of the property you transferred (if there were equity). It made sense for the trustee to look into the transfer and the value of the property you transferred to make sure there wasn't something there for the creditors. I'd say he wasn't doing is job if he hadn't investigated. The entire property Avenger owns an interest in is worth less than the AZ homestead exemption. If he distributes the property to the beneficiaries, then he should not have a problem claim a homestead exemption on his 1/3. If the trustee wants to investigate, that really is not something to worry about as long as Avenger is confident that his 1/3 interest is worth less than the homestead exemption.

no it's really not that different, while owned with another family member, it came from a transfer of trust funds. the place although we were on the deed was still in the trust. however, as you point out if avenger's qualified as his exemption, that may be fine. presently, he is the only one enjoying the use of the not the home and all shares of it, no the other two siblings. it will also depend on what the trust said. was this house suppose to be sold and then the proceed distributed to the other benefactors and when? could one buy out the other to maintain control of the property? my only point is this, and in our situation the place was over 50k underwater, it was still red flagged. in the end the trustee clearly knew that and had no interest. if op's 1/3 is exempt under the homestead and he shows no mortgage, it just may all need to be explained away. that really was my point here.