Posted on: 29th Nov, 2007 05:42 pm
Hi, I have a piece of land that is paid for. Though it is under my name, the land is really to pay off a loan to my sister when we are able to sell it, which in this market we have'nt had any luck. I am facing possible foreclosure a a few homes, if the banks don't accept
the short sales and even possible bankrupcy, since the busness we bought less then a year ago is doing badly and we just can't keep up with all the payments. How can I protect this land and my sisters money, if the worst happens. Can I quit claim it to a family member till this is over then quit claim it back to me? Will there be tax ramifications for myself or family member? Is putting the land in an LLC the answer? I am petrified of loosing my sisters money.
the short sales and even possible bankrupcy, since the busness we bought less then a year ago is doing badly and we just can't keep up with all the payments. How can I protect this land and my sisters money, if the worst happens. Can I quit claim it to a family member till this is over then quit claim it back to me? Will there be tax ramifications for myself or family member? Is putting the land in an LLC the answer? I am petrified of loosing my sisters money.
hello irizarrymarilyn,
which bankruptcy are you planning to file?
in case of bankruptcy ch 13, your property and assets are protected but for ch 7, your assets will be liquidated to pay off the creditors.
if you sign a quit claim to transfer the ownership rights to a family member up to 2 years before filing bankruptcy, this could be considered as a fraudulent conveyance. you may not do this legally to keep away your creditors from collecting on it and the bankruptcy trustee can prevent such transfers by filing a lawsuit.
the llc could be an option to protect your asset but it depends upon the laws of your state. could you tell me where you live? are you the single member of the llc?
which bankruptcy are you planning to file?
in case of bankruptcy ch 13, your property and assets are protected but for ch 7, your assets will be liquidated to pay off the creditors.
if you sign a quit claim to transfer the ownership rights to a family member up to 2 years before filing bankruptcy, this could be considered as a fraudulent conveyance. you may not do this legally to keep away your creditors from collecting on it and the bankruptcy trustee can prevent such transfers by filing a lawsuit.
the llc could be an option to protect your asset but it depends upon the laws of your state. could you tell me where you live? are you the single member of the llc?
Sorry, this was me in the above post. Forgot to log in.
Bankrupcy is my last resort if i don't shortsale and have these foreclosures, because I was told that if i did foreclose they could come after me for the difference in what I owed and they sold the property, so in doing so they would take any asset I may have. Is this true? The property is in California.
I don't have an llc yet, But if this would make a difference,Whats the best way to set it up?How many members should it have and how much does an llc cost anyway and how long does it take? thank you for replying so quickly, I'm pretty desperate right now about this.
I don't have an llc yet, But if this would make a difference,Whats the best way to set it up?How many members should it have and how much does an llc cost anyway and how long does it take? thank you for replying so quickly, I'm pretty desperate right now about this.
Hello Marilyn,
Yes, that is true. Your lender might seek a deficiency judgement for which you will have to pay the outstanding mortgage. Even if he forgives the debt you will have to pay tax on the unpaid loan.
In California, setting up an LLC will not protect your asset. Because if you transfer the property to the LLC before filing bankruptcy, that again will be considered as a fraudulent conveyance. In case of a single membered LLC, the bankruptcy trustee can sell your asset to pay the debtors and even in case of a multi-membered LLC, only the bankrupt members assets may be sold off but the assets of the other members remain protected.
Yes, that is true. Your lender might seek a deficiency judgement for which you will have to pay the outstanding mortgage. Even if he forgives the debt you will have to pay tax on the unpaid loan.
In California, setting up an LLC will not protect your asset. Because if you transfer the property to the LLC before filing bankruptcy, that again will be considered as a fraudulent conveyance. In case of a single membered LLC, the bankruptcy trustee can sell your asset to pay the debtors and even in case of a multi-membered LLC, only the bankrupt members assets may be sold off but the assets of the other members remain protected.
Can you then explain how a chapter 13 works? Did you say that I would be able to keep the asset?
Hello Marilyn,
Bankruptcy Ch 13 is available to individuals having regular income and you will have to repay all or part of your debt within a time period of 3-5 years.
You can keep all your assets and you will have to pay the creditors according to the repayment plan approved by the court.
You will find further information on bankruptcy Ch 13 at http://www.mortgagefit.com/bankruptcy/chapter13.html
Kindly have a look at it.
Bankruptcy Ch 13 is available to individuals having regular income and you will have to repay all or part of your debt within a time period of 3-5 years.
You can keep all your assets and you will have to pay the creditors according to the repayment plan approved by the court.
You will find further information on bankruptcy Ch 13 at http://www.mortgagefit.com/bankruptcy/chapter13.html
Kindly have a look at it.
California is an "anti-deficiency" state which means the lenders sole recourse is to foreclose on the mortgaged property. The lender cannot come after you for the difference.
Putting the land in an LLC, or other legal entity, may keep the land from creditors. You are better off putting your failing business in a C-corp to prevent those creditors from coming after you personally.
Putting the land in an LLC, or other legal entity, may keep the land from creditors. You are better off putting your failing business in a C-corp to prevent those creditors from coming after you personally.