Parents may file Ch7 - Can they take MY home?

[rswingman]

I'm 38 in Indiana and my Parents owned a small business worth about 1M. They went out of business and will probably have to file ch7. Banks won't give anyone a loan to buy the property. The remaining equity may not be enough to satisfy their creditors.

Some time ago, they bought a mobile home for me in which my wife & myself now live. It was intended as a gift, but they never got around to signing it over to me. We've been paying the lot rent and the trailer is bought & paid for.

We receive Food Stamps and I, Medicaid as well (considered Disabled by DFC). Until recently, we weren't sure whether DFC would count the trailer (about $15,000 around 5 years ago) as an asset and therefore disqualify us; and that's one reason why we procrastinated.

We now know that it won't be a problem and desperately want to get the trailer in our name, but now my parents are stuck with it pending proceedings. I've read the Indiana law on exemptions, but our case seems to be in the gray. It's meant to be our home, but it's still in their name.

What could happen?

[justbroke]

The Trustee could find that the value of that property is not exempt, and then sell the property. It's just that simple. Since your parents own the property (via holding title), it is their property, not yours.

If they are filing Bankruptcy anytime in the next several years (yes, years), they may not even be able to "give" that property to you, as the Court may believe that they did so in order to not lose it to creditors. Which is what they actually would be doing.

I'm very sorry you are in this position, but this is exactly the problem where things are not titled correctly to begin with.

[rswingman]

Right, so that is the strict Legal interpretation. So the other half of my question would be of "Judicial Discretion"?

The fact is, that we've wanted to do it for years, but were in fear of it messing-up my Foodstamp/Medicaid situation. I've been living here for over 5 years & paying lot-rent. It coulda been a done-deal long ago except for circumstances unrelated to their financial situation which is now finally culminating.

Of course anything they wanna sell is gonna be interpreted as "wanting to save it from creditors". So does a Judge have the discretion to make a circumstantial exemption based on his impression of intent or as a "humanitarian" gesture?

Thanks

[justbroke]

Right, so that is the strict Legal interpretation. So the other half of my question would be of "Judicial Discretion"?

There is no "judicial" discretion in this. What matters is the title at the time that you filed.

Of course anything they wanna sell is gonna be interpreted as "wanting to save it from creditors". So does a Judge have the discretion to make a circumstantial exemption based on his impression of intent or as a "humanitarian" gesture?

No. Bankruptcy is a technical process. The process is to allow you to get a fresh start, but also not at the penalty of creditors, who have rights too. There is just no discretion in this area. If a Judge did do so, a creditor would very easily have it overturned anyhow. The Trustee also wouldn't let this happen.

Exemptions are not circumstantial. They are actual.

[rswingman]

What matters is the title at the time that you filed.

They haven't filed yet; they've gone out of business and have been liquidating what they can. All the creditors are breathing down their neck. If only the damned banks would give someone a loan to buy the business property...

Their Lawyer hasn't been very helpful with their questions. The consultation was supposed to be free, and then he wants to charge them more for every returned call.

Is it safe to transfer the Title BEFORE they file?

[debtprison]

I wonder if there would be a way around this if there were say a rent-to-own agreement or such stating that you would make the payments that you have and after so many years would get possession.

Could the Trustee nullify your agreement if it were say signed and dated two or tree years ago (hypothetical case)? I'm just wondering. I've never done a RTO agreement but is there a requirement for an official filing or some sort of lien?

I've considered RTO's before and it always made me curious.

[debtprison]

They haven't filed yet; they've gone out of business and have been liquidating what they can. All the creditors are breathing down their neck. If only the damned banks would give someone a loan to buy the business property...

Their Lawyer hasn't been very helpful with their questions. The consultation was supposed to be free, and then he wants to charge them more for every returned call.

Is it safe to transfer the Title BEFORE they file?

You need to do some heavy research or get an attorney to research it for you. The trustee will want to see back data for X months or X years and if s/he sees the transfer it will probably be reversed. Tread carefully...

[justbroke]

Is it safe to transfer the Title BEFORE they file?

No.

[rswingman]

The critical detail seems to be whether or not it's exempt. Here's one site that says the exemption is up to 15k, and the other says 7.5k. And some of this language is confusing.

http://www.bankruptcyaction.com/inexemptions.htm

http://www.bankruptcyinformation.com/IN_exemp.htm

It was worth about 15k over five years ago; it must be less now. I've seen the assessment fairly recently (not sure where it is), but I'm sure it's less now.

So is it 7.5 or 15? Can anyone get a "feeling" out of this?

[justbroke]

[rswingman]

I think they got from the consultation, that they'll be keeping their house (which they may lose in the end anyway), and their two vehicles.

They'll be losing a good size building, several acres of property, a business pickup-truck, a full-dress motorcycle, and possibly the land to which they hoped to retire.

Then there's our trailer (less than 15K) which is needed by us to live in.

[justbroke]

Then there's our trailer (less than 15K) which is needed by us to live in.

Like I said... it will depend on what they decide to exempt, and what's left over... to cover the trailer.

[hereforinfo]

I have no idea what they can exempt, but I just wanted to say that mobile homes depreciate even in a good real estate market. Considering how bad things are now, I would guess it has depreciated even more than you'd think and is worth a lot less than it was 5 years ago.

[justbroke]

I have no idea what they can exempt, but I just wanted to say that mobile homes depreciate even in a good real estate market. Considering how bad things are now, I would guess it has depreciated even more than you'd think and is worth a lot less than it was 5 years ago.

True. I think you're nervous about the whole thing, and just staying in touch with your parents and seeing how their attorney is exempting it, should put you at ease.

[rswingman]

Something that bothers me, is that the trailer is free & clear, where their house & vehicles are borrowed against heavily. The trailer must be a very attractive target to their creditors. It could be the easiest & quickest thing to turn around & sell.

They're not real happy with this Lawyer. We don't know if he's working on it or not and they're thinking of getting another one.

Found the assessment: 10,600 for 2009.