Can we take our in-laws second home if they are filing for bankruptcy? 14 Answers as of June 10, 2011

My in-laws are filing bankruptcy and have offered to do a owner will carry with us on their second home, since we live in the town where it is located and currently rent. it would be a great opportunity for us, is this possible?

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Burnham & Associates
Burnham & Associates | Stephanie K. Burnham
Any gift by your In-Laws would have to be reported if it was within one year of the Bankruptcy filing. If you are purchasing the home for fair market value, you should be able to purchase the home.
Answer Applies to: New Hampshire
Replied: 6/10/2011
Financial Relief Law Center
Financial Relief Law Center | Mark Alonso
That home is an asset and would need to be listed in the bankruptcy filing of your in laws. It would be abuse of the bankruptcy code to transfer an asset prior to filing bankruptcy and the US Trustee will go after the asset to include in the bankruptcy filing.
Answer Applies to: California
Replied: 6/9/2011
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
Real property laws vary from state to sate on this. You need to see a lawyer in your jurisdiction to get an answer to this question, it also depends on the note. In theory it is possible, but you need to see a local lawyer.
Answer Applies to: California
Replied: 6/9/2011
Law Office of Maureen O' Malley
Law Office of Maureen O' Malley | Maureen O'Malley
I'm not completely sure, to be frank. If the purchase price would be the same to you as it would be to any other buyer, there's no issue of fraud there. However, it could cause your in-laws difficulty because they'll be receiving income. I'd suggest they check with their lawyer to determine if it would cause difficulties in their circumstances.
Answer Applies to: Virginia
Replied: 6/9/2011
Apple Law Firm PLLC
Apple Law Firm PLLC | David Goldman
This would depend on the type of bankruptcy and probably require approval of the bankruptcy trustee. Your relatives should talk with their bankruptcy lawyer and see what their opinion is.
Answer Applies to: Florida
Replied: 6/9/2011
    Bird & VanDyke, Inc.
    Bird & VanDyke, Inc. | David VanDyke
    This a very tricky thing to do for your in laws prior to filing bankrutpcy. Any such transfers must be disclosed to the court and could be set aside if the court thinks they are trying to hide assets. A person transfer all their assets and then think they can file bk. On the other hand if the property has no equity it may be no harm no foul.
    Answer Applies to: California
    Replied: 6/8/2011
    The Schreiber Law Firm
    The Schreiber Law Firm | Jeffrey D. Schreiber
    It may be possible, but the note they take back from you is property of their bankruptcy estate and subject to what the bankruptcy trustee wants to do with that note - like sell it to a third person. Also the sale must be for the current fair market value. If they sell it to you for a discount, the bankruptcy trustee has powers to alter the sales transaction so you end up paying fair market value. If they do not disclose this transaction in their bankruptcy papers, it is a crime with severe penalties, so it should be done on the up and up.
    Answer Applies to: California
    Replied: 6/8/2011
    Law Office of Dennis Jay Sargent Jr, PLLC
    Law Office of Dennis Jay Sargent Jr, PLLC | Dennis J Sargent Jr.
    You have to be very careful with this kind of transaction. Any transactions made by the debtors, your in-laws, within 2 years before the date of the bankruptcy filing can be avoided by the bankruptcy trustee when that transfer is made with the intent to defraud the court or the transfer was for less than reasonable value. Any transfer to an insider, you, would raise a red flag with the Trustee. Your in-laws should consult with their attorney that is handling the bankruptcy prior to entering into the transaction. You should also consult an attorney to make sure your rights are protected.
    Answer Applies to: North Carolina
    Replied: 6/8/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    If you want to run up huge legal fees and possibly lose the home do what you are asking. Otherwise run as far away from that "deal" as you can. The way you MIGHT be able to acquire it without problems will be if the Trustee places it for sale and you bid, or if they keep it through the bankruptcy and sell it after.
    Answer Applies to: Georgia
    Replied: 6/8/2011
    Law Office of Harry L Styron
    Law Office of Harry L Styron | Harry L Styron
    It depends on whether they are filing under Chapter 13 or Chapter 7. If the former then you can probably arrange to get the home. If it is a Chapter 7, then the trustee will want to sell the home in order to pay off creditors. I am assuming since you mention seller financing that they don't owe anything on the home. If they do, then it is likely that the deed of trust has a "due on sale" clause which will make due the full principal balance if they transfer title.
    Answer Applies to: California
    Replied: 6/8/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    When your in-laws file bankruptcy all there property becomes part of the bankruptcy estate and is owned by the chapter 7 trustee. It depends on whether the trustee wants to sell the property or abandon it to the debtors. Upon discharge the property reverts to the debtors. This is a complicated issue and you should seek the advice of an attorney who is a certified specialist in bankruptcy law. Consult the State Bar for a listing of those attorneys in your area.
    Answer Applies to: California
    Replied: 6/8/2011
    Daniel Hoarfrost, Attorney at Law
    Daniel Hoarfrost, Attorney at Law | Daniel Hoarfrost
    For a transaction like that to pass muster, it must be fair market value on both sides of the transaction.Once the bankruptcy is filed, the trustee has the first claim on the home.If the trustee chooses not to assert an interest (i.e. abandon it), then you and your in-laws are free to do whatever you want.
    Answer Applies to: Oregon
    Replied: 6/8/2011
    Symmes Law Group, PLLC
    Symmes Law Group, PLLC | Richard James Symmes
    This could be considered a transfer to an insider if the transfer is made prior to filing bankruptcy. This transfer will have to be listed on the bankruptcy petition and the trustee has the right to reverse the transfer and include the home as part of the bankruptcy estate. You should speak to a bankruptcy lawyer in your jurisdiction prior to taking any action.
    Answer Applies to: Washington
    Replied: 6/8/2011
    Lakelaw - Loop Bankruptcy
    Lakelaw - Loop Bankruptcy | David Leibowitz
    You can't just take property of people who are filing bankruptcy. Creditors have first rights. If there is equity and you don't pay fair equivalent value, it's a fraudulent transfer. The in-laws could lose their discharge and you could lose the property.
    Answer Applies to: Illinois
    Replied: 6/8/2011
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