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FiveStarLaw
FiveStarLaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36561
Experience:  Bankruptcy Lawyer. Experienced.
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I was laid off from my job 10/30/2008, I was earning 6k+ a

Customer Question

I was laid off from my job 10/30/2008, I was earning 6k+ a month in the auto finance biz. All I have comming in now is $1100 x mo unemployment comp. I live in Florida, I own a home that is aprox. 50k in neg equity. I also have a home in NC that is financed joitly with my fiance' I recently did a quit claim deed in her name only, to protect whatever equity we may have, so not to hurt her interest in the property. My question is, was that the right thing to do, and can it back to me if I decied to file for bankrutcy, due to I'm running out of savings and I'm about 25k in credit card debt. I would also include the Florida house in the bankruptcy, due to all the neg. equity and that I've stopped making the payments. I do have a 401k still with my prevoius employer with aprox 63k, is this 401k secure in a bankrutcy, or will I lose that money? If it is not secure should I pull it out now and pay the tax penalty, and tuck it away and wait 6mo's to file?
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  FiveStarLaw replied 5 years ago.
Was there any equity in the house in NC?
Customer: replied 5 years ago.
Yes, not sure how much, because the market is always changing, but should be aprox 70k
Expert:  FiveStarLaw replied 5 years ago.

Hello,


Thank you for your question. I am happy to assist you.

In a Chapter 7 bankruptcy, you typically would be able to keep the 401K. Typically the credit card debt and personal liability on the secured debt (house in Florida) would be discharged in a Chapter 7 bankruptcy.

Unfortunately the transfer to your finance may be avoided as a fraudulent transfer by the bankruptcy court. This means that you could lose your interest in the property or have to purchase your interest back from the bankruptcy trustee regardless of the fact that you transferred it to your finance.


Bankruptcy Code §548 provides for the avoidance of fraudulent transfers within two years before the bankruptcy filing date. (Transfers to self settled trusts and similar devices are subject to a 10 year avoidance reach back.)

For your convenience, the Florida bankruptcy exemptions are as follows:

1. Homestead. Property cannot exceed ½ acre in municipality or 160 contiguous acres elsewhere;
2. Annuity contract proceeds;
3. Disability or illness benefits;
4. Life insurance cash surrender value;
5. Alimony, child support needed for support
6. Damages to employees for injuries in hazardous occupations
7. Pre-need funeral contract deposits
8. Pensions
9. Any personal property to $1,000 (the exemption is increased to $4,000 for those debtors not claiming or benefiting from a homestead exemption. )
10. Health aids
11. Motor vehicle to $1000
12. Most Public benefits
13. $500 in wages per week either unpaid or paid and deposited into bank account for up to 6 months

I hope that the information which I provided was helpful to you.

Best wishes for a successful outcome. If you have additional questions, please do not hesitate to submit them to me directly.

Thank you,
Customer/span>

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THIS IS FOR INFORMATION ONLY. NO ATTORNEY-CLIENT RELATIONSHIP EXISTS. PLEASE CONSULT A LAWYER IN YOUR STATE FOR LEGAL ADVICE

Customer: replied 5 years ago.

Thank you,

2 concerns, you said that "typically" I would be able to keep the 401k, would that imply that it is possible they could take it? Also, my defence to the quit claim deed to my fiance, would be that due to the fact that I can't no longer make the payments, and she alone would have to make the payments, then she would be intitled to the claim deed, does that make sence?

Expert:  FiveStarLaw replied 5 years ago.
Hello,


Thank you, My pleasure.


2 concerns, you said that "typically" I would be able to keep the 401k, would that imply that it is possible they could take it? Yes if they could prove that you recently transferred assets into the 401K to avoid your creditor claims.


Also, my defence to the quit claim deed to my fiance, would be that due to the fact that I can't no longer make the payments, and she alone would have to make the payments, then she would be intitled to the claim deed, does that make sence? It does make sense to me however it would not be a recognized defense to a preference claim under the bankruptcy code.


I hope that this information has helped you.

If I can be of assistance in the future, please ask for .

Bonus and Positive Feedback = job well done.

THIS IS FOR INFORMATION ONLY. NO ATTORNEY-CLIENT RELATIONSHIP EXISTS. PLEASE CONSULT A LAWYER IN YOUR STATE FOR LEGAL ADVICE

Customer: replied 5 years ago.

Thanks again,

The last thing I want is to get into a legal problem with the bankruptcy courts, However, I don't plan to or able to keep up the payments on the FL house, should I just let it forclose, with out filing for chapter 7, and if so, will the FL mortgage company have any rights to the NC equity, or maybe they just want pursue it with how backed up all the forcloser courts are? I'm just not sure what to do, but I need to start figuring it out soon, and protect what little I have. I have no interest in keeping the FL house, it's just not worth trying to salvage a losing interest. What do you think? Help

Expert:  FiveStarLaw replied 5 years ago.

Hello,

A Chapter 7 seems like the better alternative. If you do not file, the lender on the Florida house can execute a deficiency on the NC house. At this time you are unemployed, and thus would likely qualify for the Ch 7.

Another alternative is a deed in lieu of foreclosure. It is outside the scope of your original question, but I will briefly tell you about it.


This procedure allows you to transfer your property voluntarily to the lender in return for your debt or deficiency being forgiven. Although it is a negative strike on your credit rating, it is less harmful than a mortgage foreclosure.


With a deed in lieu of foreclosure a borrower transfers title to the mortgaged property to the lender, with the lenders consent and agreement to forgo a deficiency judgment.


I hope that this information has helped you.


If I can be of assistance in the future, please ask for .


Bonus and Positive Feedback = job well done.


THIS IS FOR INFORMATION ONLY. NO ATTORNEY-CLIENT RELATIONSHIP EXISTS. PLEASE CONSULT A LAWYER IN YOUR STATE FOR LEGAL ADVICE
Customer: replied 5 years ago.

ok, so lets say I leave the 401k in place, I've already did the quit claim on the NC house, I stop making the payments on the FL house and the credit cards, then wait 6mo's to file BK. Even if I'm employed by then (which I hope to be) I'm sure my income will be much less then it was. The courts will know about the NC house because it's on my credit report. Will that make me frudulant and liable in ther eyes, and then subject to fines, etc.

I can't file now, since I'm not late on anything at this time, but in 6mo's things will be much different!

Thanks again for all your help

Expert:  FiveStarLaw replied 5 years ago.
The 6 month period that you refer to is not applicable here. You do not need to be late to file. The period is two years. Please accept/bonus me for my answers thus far. You can then submit addditional questions.
FiveStarLaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36561
Experience: Bankruptcy Lawyer. Experienced.
FiveStarLaw and 2 other Bankruptcy Law Specialists are ready to help you
Customer: replied 5 years ago.

Thank you for all your help, I've have a much better understanding of my situation. I will be sure to reqestCustomerin the future, if need be. Thanks again!

 

Expert:  FiveStarLaw replied 5 years ago.
Good luck.

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