Posted by Phillip(TX) on July 04, 2003 at 03:30:44:
Thanks Brian.
Haven’t considered a L/O as an option. I know nothing about how BK or divorce works. So while in Arkansas next week, I’ll check it out. The house is a 3/2/2 in a nice neighborhood purchased about 7 yrs. ago for 60,000. Hate to see the bank get it.
Phillip(TX)
Chap 13 and Sub 2 - Posted by Mich_Mike
Posted by Mich_Mike on July 02, 2003 at 11:44:58:
Hello all. I have read the archives and still have not found a solution to my problem. Here it is:
Couple files chap 13 bankruptcy. They now want to move to another state (TENN) and are willing to give me there house sub2 with 2k for moving money.
They are willing to dismiss the BK, but may want to refile in TENN after establishing residency (6 months). Since the mortgage will be in their name, the court will most likely want to include it in the refiling.
This is my only solution, as I see it:
Have them deed me the house. Find a T/B.
Six months down the road, re-fi the property in my LLC’s name.
The house has ~30K in equity in it, so I must tread lightly (trustee will want proceeds to pay IRS, the main creditor).
Is there any other way to do this deal? The couple wants to move by the end of July.
Thanks in advance,
Mike
Re: Chap 13 and Sub 2 - Posted by B.L.Renfrow
Posted by B.L.Renfrow on July 02, 2003 at 15:02:26:
I am neither an accountant nor lawyer, but if the IRS has already filed a lien, they’re not likely to cancel it unless the debtor has other assets they can attach.
As for the BK, if it’s already filed the seller cannot deed you the property without permission from the trustee. If the BK has been dismissed they can do whatever they want. If they refile later in another state, as long as the payments are current, the lender is unlikely to care.
However, if they do refile, the trustee certainly can “look back” at any transaction in which the seller has engaged in a defined time period, which I think is a year, but might be more. Unless the trustee is suspicious they are trying to hide assets, it shouldn’t be a big issue, but you should be aware the trustee/court would have the power to set aside the sale if they determine there really is $30k equity and they want to go after it.
Probably the safest move from your perspective would be for the BK to be dismissed or withdrawn (if it’s already filed), and for the seller to work out a payment plan with the IRS rather than refiling BK. If they do refile, it would be better the longer they wait. If you refi within 6 months, I doubt you’re going to have a problem.
Brian (NY)
Re: Chap 13 and Sub 2 - Posted by Phillip
Posted by Phillip on July 03, 2003 at 02:31:33:
As for the BK, if it’s already filed the seller cannot deed you the property without permission from the trustee.
I am looking at a similar situation with an in-laws son. He filed BK several months back and now his wife has decided to divorce him. I would like to take the house sub to. If they would agree to sub to it… should I go see the trustee? How successful is this method? Will I have to talk to two trustee’s…BK and divorce?
Re: Chap 13 and Sub 2 - Posted by B.L.Renfrow
Posted by B.L.Renfrow on July 03, 2003 at 09:42:30:
In my limited experience in this area, it would likely depend upon whether there is significant equity in the property. Every trustee and BK case is different, but in general, unless there is at least $20k or more of equity, the trustee probably won’t want to bother with the asset. You can either call up the trustee, or if you have an attorney who understands the bankruptcy system, have him or her make the contact, since trustees are lawyers and may respond more favorably to other lawyers, especially if you don’t really grasp the fine points of the system.
Even if you do get permission from the trustee (and for what it’s worth, I’ve never heard of a trustee giving permission for a subject-to sale – not that it couldn’t happen, but I’ve never heard of it. A regular sale, yes, maybe a lease option, but don’t know about how they would look at subject-to) the departing wife – assuming she’s on the deed – would of course have to sign the deed as well as the husband.
Brian (NY)