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Ellen, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36714
Experience:  Bankruptcy Lawyer. Experienced.
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I hope you can advise me - or pass me on to a bankruptcy or

Customer Question

I hope you can advise me - or pass me on to a bankruptcy or contract lawyer that can. In 2004 I didn't have a will so I put my daughter on the deed when I bought my condo in Brooklyn, NY. It was just meant to give her the right to the property in the event of my death. (Actually the original deed did not have her on it- I had her added to it a few weeks later. I also put her name on the mortgage, thinking she could get the deduction, since the plan originally was for her to live there.) My daughter has been out of work for over a year, lost her medical insurance and I have been been tapping into my retirement fund to pay her medical bills, which are up to date. However, I just found out she has $13,000 credit card debt with HSBC which is now with a collection company- and when she called them to to try and renegotiate they would barely budge - only offered a reduction to $11K and actually suggested that she declare bankruptcy - and mentioned that she had a condo with plenty of equity - and were very pushy. I was told that she should NOT contact them and I should do a quit claim deed transfer in the meantime - it was explained that quit claim isn't a free pass - but it gives the creditor another layer of legal proceeding to go through - and they may be more likely to settle at the 30%-40% the two other creditors settled with her for. I see Quit Claim deeds that can be downloaded, and thought it would be pretty straight foward - but when I went to ASCi's site and called them they said I have to fill out these three tax forms to transfer the deed. My daughter never paid a penny, and I never meant to gifted 1/2 of the apartment to her - which is why she didn't pay gift tax. However this forms ask questions where don't even apply to what I did - I have no idea how to deal with them - and to top it off, it looks like they consider her transferring the apt back to me a gift - and calculate the gift tax I now have to pay. These tax forms open a huge can of worms - when all I did was what my mother did before me: Put my child's name of a deed. She does not have $11K to pay this debt, but has now lost all her bargining power because the creditor sees this as an asset. I'm not a husband manipulating tax fraud by putting my house on my wife's name (which wouldn't be consider a gift because they are spouses.) I'm a mother that put a kid's name on a deed because I didn't have a will. I can't be the only person to do have done this. I thought that as long as she didn't contribute to paying the mortgage and I didn't declare it as a gift to - my intent was obvious. I was the sole purchaser - and added her as an afterthought, so she would inherit it with probate. If anything I need the deed CORRECTED - not transferred. I'm now finding out that a Quit Claim Deed must be submit with these tax forms (RP5217-NYC, RETT: TP-584 + NYC-RPT) I was told this companies pay 10 cents on a dollar - and usually will negotiate down to 30%. I'm sure they don't want to go through the legal process of putting a lien on the apartment - and with a Quit Claim there would be another legal layer they'd have to get through and would probably be more flexible - but these tax forms are crazy. How do I begin to straighten this out so they will offer her a reasonable settlement - and not threaten to go after the apt? Thanks you, xxxxxxx
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  Ellen replied 5 years ago.

Welcome to JustAnswer and thank you for the opportunity to provide you with information. I am a New York licensed attorney.

What is the amount that you owe on your mortgage and what is the amount that you could sell your apartment for?

Customer: replied 5 years ago.
I only owe about $60 - about $250 equity - But as I under it the worst they can do is but a lien on the apartment which will allow them to take the money when I sell- and I have no intention of selling. I just want to get my daughter off the deed so she can negotiate a settlement with the creditors who took over the credit card debt- and my home will never be put at risk by her again. What I want to know is if - considering that she was not on the original deed, never paid a penny towards it - and as a parent I simple added her the deed when she was a teenager because I didn't have a will - and I never gifted her the apartment - can the deed be Corrected with a Quit Claim Deed without all kinds of tax forms and ramifications?
Customer: replied 5 years ago.
This window is asking me to Reply to Expert - but I already responded to your question - Did you receive my response?
Expert:  Ellen replied 5 years ago.
Thank you.

Unfortunately you cannot record the quitclaim deed unless you submit the tax forms. The property recorder's office will reject the quitclaim deed for recording without tax forms

The reason I was asking about the equity in the property is to try to give you helpful information from a different angle. In Kings County, the first $150,000 in equity in a debtor's homestead property is exempt from the claims of creditors. Therefore if your daughter is living with you at the time she negotiates with the creditor or files bankruptcy, her 50% interest in your apartment would be protected

Please use the REPLY button if you have any questions concerning my answer. Otherwise please click ACCEPT so that I am paid by the site for answering.
Customer: replied 5 years ago.
I'm aware of that - and and she is not living there - but again my goal to get her off the deed.
The tax forms I listed in my question ask questions that don't pertain - but must be answered.
I never gifted her the apt, she is not gifting it back to me - but according to this form what ever the higher amount is - the amount she paid or the balance of the mortgage is considered a gift that it looks like they want me to pay taxes on - which would be higher the the debt she owes.
What is the procedure for correcting a deed - which was used to transfer a portion of ownership or give a gift, just to designate a child to received a property upon my death?
Customer: replied 5 years ago.
If the creditor puts a lien on the property they can only collect the money if I sell it - They can't board up the apartment. I don't see why they would assume that me her owning a piece of it is going to get them there money - when I may not sell for 20 years. And, if in fact that want to count the condo as 1/2 hers, they can't even garnish the 10% of her salary - since her she only nets $2200 a month, and her rent and utilities come to $1700, so just she barely has enough money for groceries - If you add half the mortgage to that expense I don't think they will get a judgement to garnish her wages, since it would put her on the street.
THere has to be a way to talk to this collection company - let them know they are not dealing with an idiot - 've been told they probably paid 10 cents on the dollar for the $13K debt - Clearly getting $300 on a $130 investment beats talking her to court and putting a lien on an apartment that is not going to be sold.
Rather than give this to a collection company that will get it down to 50% or so - and probably take 10% for themselves from that settlement -How does a consumer get it down to even 40% without getting involved with a debt mediator?
Customer: replied 5 years ago.
If I do fill out these tax forms - and I wrong - or am I going to get hit with a tax bill just for taking her name off the deed.
Will they consider this a gift to me - and will I have to pay a gift tax - or any other kind of tax? It also looks like there are other tax ramifications - since they ask questions about market value and money owned?