Bankruptcy Law Questions? Ask a Bankruptcy Lawyer Now.
Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here.
Thank you for your question, I need some clarification though.
First, who filed bankruptcy?
second, is the trustee selling the house?
third, who is the purchaser?
fourth, I assume the home is jointly owned between you and your sister. correct?
fifth? are the taxes behind?
Once I get this info, I can get you an answer. thanks
My wife and I filed chapter 7, there is no house on the jointly owned land, there is just half an acre of land, but we are giving up our house.My sister in law, my wife's sister bought my wife's share of the jointly held land at market value as established by an appraisal which I had done in March.
Tthe taxes on the property in question are upto date thanks to my sister in law. We have actually had no connection to this land for the last 20 years oither than to cross onto it to get to the beach.
Is the trustee trying to vacate the transfer/sale here? If you did not get fair market value for the sale, the trustee can negate that transaction to bring the asset back to the bankruptcy estate. The debtors' share can be liquidated then, to get cash to pay to the creditors.
The value can be based on an appraisal. Tax assessed values are not the true value of the property, just what the county says for taxing purposes. Taxes are joint liability, so if the purchase price was discounted, that could be where the problem lies.
If i'm off base, let me know. If so, please provide the full narrative so I can follow what is going on, so I can answer your question more completely.
I'm sorry Terry, Let me start from the begining. My wife and I decided, after being ripped off by a debt consolidation scheme to the tune of $5,400 and discovering that our house was $100,000 underwater on our Mortgage, that we have no other option but to declare chapter 7. As we are filling out the forms with our attorney, my wife remembers that she jointly inherited a 1/2 acre piece of land up in livingston county on lake Runyan. There is no house on the land, it is just a slip of land in between two other pacels of land owned by other family members. My wife and her sister are both on the title for this land, but her sister has been paying all the taxes, lake fees, county sewer charges etc since 1991. My Sister in law does not want to be forced to sell this land, so I hired an appraiser to get a market value for the land at $65,000. We had my sister in law buy my wife's half of this land for $32,500. but as part of this transaction, we count 1/2 of all the taxes and fees that my sister in law has paid that we should have paid.as part of the price. I am trying to find a precident for including this already paid amount that we should have paid as part of the purchase price of the land.
So, have you filed for bankruptcy yet? If the deal was at arms length, and it was for fair market value, then the transaction should be fine. What the bigger issue is though, is the protection of the cash. You would have to spend down the cash on necessities, or else the trustee could object to discharge, or go after preferential payments of debts to re-allocate amongst all creditors. The cash is the asset to watch out for now. The trustee should not object if the sale accounted for 1/2 of those taxes. Since you were responsible for those taxes as an owner, they have to be paid. The only thing the trustee could object to is the payment of the taxes back to your wife's sister through the closing (although it was in the form of a discounted sale price). The 1/2 of the money owed for the taxes is a debt, and you chose to pay it out of the closing, by discounting the purchase price. This is preferential, in that the trustee could object, to bring that money back to the bankruptcy estate to distribute to the unsecured creditors.
These issues must be disclosed in the case for 2 years for the real estate transaction. So, if you have not filed, it may be best to wait 2 years from the date of the sale before you file to avoid having to disclose this in the petition statement of financial affairs. The payment to insiders has to be disclosed for a year.
Since trustees vary, you should contact a local bankruptcy attorney to help decide when best to file the case to make this issue not a problem in the case. You would also need advice on how best to spend down the proceeds of the sale of the land too, since the resulting cash is an asset too in a bankruptcy case.
The local attorney can search any precedents in Michigan for you. Each state has different laws. My opinion is that the trustee would go after this, since this would be considered a preferential payment that could be rescinded by the trustee. You should get specific legal advise as to how best to move forward. It definitely seems to be a large problem though to file now in my opinion. The trustee's job is to find assets, and reverse preferential payments, so money can be used to pay all creditors in a case, so this is definitely a red flag.
Thanks for your question, good luck.
We filed on August 2nd, The title transaction went through on the 12th of July. We intend to turn the $3,000 sctual cash we recieved over to the Bankruptcy Trustee, My wife's car we are covering under tools for work and personal exemptions. My Understanding is that Federal Law applies here, under federal law , How should I have protected this land?
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