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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
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Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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Id lived in my house for 14 years and rented it out May 08

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I'd lived in my house for 14 years and rented it out May 08 to live with my husband. Both my house and the house I live in now (my husbands house) are upside down in loans. My house I need to foreclose on or file a chapter 7 so I can get away from it. It is in my name only. My name is XXXXX XXXXX title of my husbands house as well as my car. Can they take my or my husbands or my cars...both are paid off. Can they take the house we live in now or whats left of my 401? I have been unemployed since January 1, 2007 and have applied for SSDI.
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 5 years ago.

Since the second property is upside down, there is no incentive to foreclose so as to pay unsecured creditors. So, as long as you keep the payments up on the home that you're living in, then it will be safe.

 

Retirement accounts and pensions (401(k), IRA) etc., are exempt under MIchigan law, so these too are safe.

 

Motor vehicles are only safe up to $3,175, so if your vehicles are worth more, then you have a problem, here.

 

Hope this helps.

 

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Customer: replied 5 years ago.
Can I put my car in my husbands or sisters name to protect it
Expert:  socrateaser replied 5 years ago.
That would be a fraudulent transfer, and the bankruptcy trustee would either seize your vehicle or request that the court dismiss your entire bankruptcy case. Which would leave you at your creditor's mercy for the next 8 years.
Customer: replied 5 years ago.
Is a deed in lieu of foreclosure a better idea?
Expert:  socrateaser replied 5 years ago.

A deed in lieu would eliminate the deficiency judgment. But, you would have to convince the lender to accept the deed. Otherwise, the foreclosure will continue unabated.

 

 

Customer: replied 5 years ago.
Right now my credit is probably very good to excellent. I am not behind on my mortgage, and my car is paid off. I have a total of 1500.00 in credit card bills but cash wise 900.00 left to my name. I do not give a rats a$$ what happens to my credit score. My husband and I have 3 cars, 2 are over 10 years old and run accordingly. We have 1 car that is 4 years old PAID off but is still valued at 15,000. We want to keep that car.
The house that I need to file a chapter 7, a deed in lieu, or foreclosure on is a house I bought 14 years ago and lived in until May 2008 at which time I rented it because the market was so bad I knew it would not sell. It was for 14 years my primary house and was not bought for investment purposes.
I do not wish to have what is left of my/our 401k, my/our 1 good vehicle, or tax deficiency to worry about once all is said and done.
My name is XXXXX XXXXX title of my husbands house that I currently live in with him. So I am not sure what is my best avenue for me to take if you take my credit score or eventual lack thereof out of the mix
FORECLOSURE, BKY, DEED IN LIEU, OR SHORT SALE
Credit Scores seem to be so much in the forefront of the people giving answers. But credit scores are easily rebuilt. I do have personal experience with that as I filed for BKY 17 years ago and rebuilt quickly.
And it also seems people in the real estate market are always pushing for people to tuff it out and not do anything that might tear the value of homes down any further than they are by the glut of abandoned empty foreclosed homes already on the market. I do not care about realtors or my credit score. I care about getting back to life without this everyday stress
Expert:  socrateaser replied 5 years ago.

I can't tell you what the lender will do if you offer a deed in lieu. A short sale will eliminate your obligation for the mortgage, but most short sales fail to materialize, because, just like the deed in lieu, the lender must accept, and most of the time, it doesn't.

 

If you all a foreclosure, you will be hit with both a deficiency judgment and a tax bill from the IRS for "cancellaion of debt" income. You can avoid the tax effect if that home is your principal residence at the time of foreclosure, but that won't avoid the deficiency itself -- only bankruptcy or a deed in lieu/short sale will accomplish that.

 

If you intend to let the house go to foreclosure, then having a tenant may bring you income, but not enough to overcome all of the other downsides. Financially, you come out better to move the tenants out, move yoursel in, let the lender forclose and then file for bankruptcy. The fact that your husband's home has no equity means that you can keep it -- otherwise, you would have a pretty impossible situation.

 

Re the car, you could sell it, and put $5,000 into an IRA, assuming that you make regular annual contributions to an IRA. Otherwise, the court may find another fraudulent transfer. Then you could buy a cheap car and between the car and the IRA you would be able to save ~$8,000 of the car value. The remaining $7,000 woud be lost to your creditors.

 

One other thing. If your rental has a large 2nd, that mortgage can be wiped out in a Chapter 13 filing, which would leave you with only the 1st. Same goes for your husband's home. This is called a "cramdown," but it only works for Chapte 13 and it only operates on junior liens/mortgages.

 

 

socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 34867
Experience: Attorney and Real Estate Broker -- Retired (mostly)
socrateaser and other Bankruptcy Law Specialists are ready to help you

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