Q: I lost my job and suffer from medical conditions. I was behind in payments and just gave up. They took it out of my doctor’s parking lot, and I had to walk home.
A: Your options are to defend the suit if they sue you and/or try to settle with them for payments. You can also talk to a bankruptcy attorney and see whether filing under Chapter 7 is an option for you.
Q: I am in Chapter 7 bankruptcy. I paid the trustee some money and it is being distributed to my creditors. The case will be open for several more months. In the meantime, I have reached the age of 62 1/2 and I am going to cash out my pension, roll most of it over to a 401K and use the remainder to pay off my mortgage. My mortgage lender has agreed to very reasonable amount of money. Can I go ahead the do this deal while my bankruptcy is still pending? Do I need the court’s permission?
A: Generally, it is not a good idea to withdraw money from your pension to pay off a mortgage, especially while in Chapter 7. u would almost certainly be converting an exempt asset to a non-exempt asset, which may cause significant problems and even loss of property. You should wait and be sure to discuss any such plans with your bankruptcy attorney.
Q: In Chapter 13 can I be put on another house’s deed? I declared Chapter 13 about 3 years ago and have been making payments. My aunt wants to put me on her deed. What are the ramifications of that, and the risks to her? She will be entering a nursing home and doesn’t wish to sell the home.
A: Two issues. Is this wise to do for estate planning purposes for your aunt and is this wise for you to do while you are in bankruptcy? From an estate planning point of view, if she titles the house jointly with you, only half of the value of the house will be subject to inheritance tax when she dies. Since the applicable inheritance tax rate for a nephew is 15%, this could save some money. The negative side of such transfer is that if in within five years following the transfer, your aunt needs to apply for Medicaid, such a transfer could make her ineligible for Medicaid funding. The house would have to be included in her assets subject to the Medicaid claim and you may be forced to sell this house unless you could pay the fair market value to Medicaid. This is of course unless some Medicaid exclusion applies for example if you lived in the home as her caretaker for a period of two years prior to the application date. If your aunt really foresees Medicaid funding in her future, you should have her consult with an attorney versed in Medicaid law in order determine if she can shelter some of her estate now perhaps through a Medicaid trust. As far as your bankruptcy, I would check with your bankruptcy attorney as the acquisition of an interest in real estate while under a bankruptcy plan, may, violate your agreement with the trustee assigned to your bankruptcy case.
Q: In Chapter 13 can I be put on another house’s deed? I declared Chapter 13 about 3 years ago and have been making payments. My aunt wants to put me on her deed. What are the ramifications of that, and the risks to her? She will be entering a nursing home and doesn’t wish to sell the home.
A: Two issues. Is this wise to do for estate planning purposes for your aunt and is this wise for you to do while you are in bankruptcy? From an estate planning point of view, if she titles the house jointly with you, only half of the value of the house will be subject to inheritance tax when she dies. Since the applicable inheritance tax rate for a nephew is 15%, this could save some money. The negative side of such transfer is that if in within five years following the transfer, your aunt needs to apply for Medicaid, such a transfer could make her ineligible for Medicaid funding. The house would have to be included in her assets subject to the Medicaid claim and you may be forced to sell this house unless you could pay the fair market value to Medicaid. This is of course unless some Medicaid exclusion applies for example if you lived in the home as her caretaker for a period of two years prior to the application date. If your aunt really foresees Medicaid funding in her future, you should have her consult with an attorney versed in Medicaid law in order determine if she can shelter some of her estate now perhaps through a Medicaid trust. As far as your bankruptcy, I would check with your bankruptcy attorney as the acquisition of an interest in real estate while under a bankruptcy plan, may, violate your agreement with the trustee assigned to your bankruptcy case.
Q: What are the consequences if you walk away from your mortgage payment. Would you need to file bankruptcy first?After 10 months my sister is receiving no child support, though she was awarded a sum of money, since her estranged husband doesn’t work. She can’t afford her home and daycare for 2 young boys, along with the rest of her bills. She was considering filing bankruptcy or just not paying her mortgage. What are the differences between these two options.
A: If she fails to pay the mortgage, it may take 6-9 months or even more for the bank to foreclose. They will just take the home back. Sometimes, they will pursue a deficiency judgment against her. This is the balance of what was owed on the mortgage and what they eventually sell the house for at foreclosure. If the bank is owed, they can, and sometimes do, sue the person on the mortgage for that deficiency balance. Sometimes I have negotiated with banks to not pursue the deficiency, and just take the home back and be done with it, in exchange for the mortgage holder’s cooperation in signing all documents and surrendering the keys. This helps the bank in that they don’t have to sue the mortgage holder, post the house with the sheriff, etc. Bankruptcy may present a better option, depending on the circumstances as the bankruptcy stay can give additional time in the home and other debts the person is having difficulty paying, can be addressed through consolidation or discharge.