Sold my house two years ago, does that affect me?

[arizonahd]

I know I should probably ask a lawyer, but I am considering filing chapter 7 for 150k of credit card debt I have but I want make sure first this is a path I want to go.  One thing I am thinking about is the house that we currenlty live in. I sold it to my folks a couple years ago, they told me I could buy it back for the same price later if I would like. But I am concerned this might be an issue now. I sold it to them for 160k (enough to pay off the mortgage) and just deeded everything in their name even though the house was worth like 320k at the time. I pay no rent or interest (which is why I did this).  I have no income but my wife still works, so now I am thinking about this situation in the eyes of a court, ugh. Any wisdom on this would be appreciated! 

[sccredit]

I don't see how that won't be a red flag since the sale was below market. 

[arizonahd]

Right? I never even thought about it until now. So any ideas on what I can do? Am I SOL? This is stressing me to the max. 

[sccredit]

You need to speak to an attorney and see if they have any ideas

[jmw1]

This is going to be a problem because you sold it below market value and put it out of reach of creditors which is called a fraudulent transfer designed to hinder and delay creditors. If you were already insolvent at the time you sold the house, the trustee's case is a slam dunk since it seems likely to be within the lookback period for insiders. The creditors are entitled to the excess and the trustee will sue your parents and put a lien on the house to get the money. If you sold your house back then for full value, you could have paid almost all of your credit card debt at 100% and there would be no need to file bankruptcy. It would have been better if you had not done this and then you could have claimed the homestead exemption. Now you can't take the homestead exemption because you don't own the home anymore. Talk to a bankruptcy attorney and tell him everything. 

[despritfreya]

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@arizonahd wrote:

. . . I am considering filing chapter 7 for 150k of credit card debt. . . [T]he house that we currenlty live in. . . I sold it to my folks a couple years ago. . . for 160k (enough to pay off the mortgage) and just deeded everything in their name even though the house was worth like 320k at the time. . . Any wisdom on this would be appreciated! 

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You are not filing a Chapter 7.  The Arizona Trustees will be all over this conveyance.  You are to immediately discuss this with a well qualified attorney or two or three (not a bk mill) to figure out what you can and cannot do.  You will probably end up in a Chapter 13 if you file at all.  Do nothing until you are properly counselled.

Des.

[arizonahd]

Thanks guys for all the info! I know, it was a stupid thing to do on my part to sell to my parents. The logic was that I could wipe out a $1500 monthly mortgage payment. I should have just refinanced, but I was out of work at the time. I guess my next step is to talk to an bk attorney and try to salvage this. 

[Bmac66]

This would definitely be considered a fraudulant transfer. The minimum look back is 2 years, however, some states are longer.  I know California has a 4 year look back.  Definitely speak with an attorney. 

You owned a piece of property, but you sold it before filing for bankruptcy. What happens when your case gets filed?

When you transfer property out of your name to delay or defraud a creditor within a short period of time prior to filing for bankruptcy, that’s called a fraudulent transfer.

It’s also considered fraudulent under the U.S. Bankruptcy Code if you transfer property for less than fair market value in the run-up to your bankruptcy filing.