So my fiance is trying to file Chapter 7. She is in way over her head with bills she canot afford and the garnishments have begun. She went to meet with the lawyer to start and he brought up she had quick deeded a house to her father 5 years ago. This was before any/all debt was even created never the less an issue. They are saying they could go after and take her fathers house now if she filed.
Is this true? Even after 5 years? Why?
This is a question about quit claim deeds, and is a fairly nuanced discussion.
Basically, your fiance's attorney is worried that the trustee will consider that she intentionally gave the house to her father with the purpose of accruing and discharging debt without consequence. Because all creditors want to get paid, they will push hard for this interpretation. It would help alleviate the concern for bankruptcy fraud if she received money or services equivalent to market value in exchange for the deed. It should also help (if 100% true) that she was otherwise debt free at the time of the quit claim. It hurts that the house was likely her biggest asset at the time and the time period elapsed between the quit claim and now is relatively short.
Chapter 13 or a more experienced attorney may be required for this situation. 5 years is long enough that you could certainly try to prove that the hardship experienced was not forseeable and that the transfer was not intended to shed assets fraudulently. I don't know that Chapter 13 would alleviate the concern (IANAL), but your attorney could answer that question.
^^Agree with the above.
Best thing to do is for your g/f to have interviews with several Bk attorney's in your area to get good advice. Ch 13 does seem to be a viable solution from what little you posted. It is a weird thing to do to Quit Claim her interest in the house (asset) and keep the liability (mortgage) for the last five years. This will raise flags anyway because the deed was transferred to a family member. Don't do any further transfers at this time. This is something to discuss thoroughly in the interview with the attorney.
Make sure the attorney's she interviews do only Bk's and are not "bankruptcy mills". Bankruptcy mills are the large firms that typically advertise on billboards and bus benches and run many cases through the firm monthly, but the debtor doesn't really get good service by an attorney at all. It is strickly about running more and more cases through for the $$.
Try a small firm that specializes in Bk's and has one or two attorney's and a paralegal or two. They, as a general rule, have much more experience and will take time to work with your g/f to walk her through the process and handle the file in the best way for the consumer debtor.
An alternative might be for your g/f to sell her home and pay the debt. This may or may not be the best solution. She should check out all of her possibilities.