Bankruptcy in NC with too much to protect?

Question

My father is considering filing bankruptcy since he has lost his job for the third time in 4 years due to down sizing. Him & my mother live in a house they are still paying on. They owe maybe 7 years of the mortgage & the property will be paid off. In 2004, my grandmother passed away & he inherited her house. Me, my husband & 3 small children live in my grandmother's house. Now my dad is in a position where for the first time in his life, he may have to file bankruptcy. According to the lawyer we spoke with over the phone, he, my dad, owns to much for them to protect. Can he put the house in my name & we not lose it? The property is nothing special. Built in 1940 maybe 1950. It's 2 bedrooms, one bath, kitchen/dinning room, living room, small den that we have converted to a third bedroom. It's a corner lot, about half an acre. The lawyer we spoke with said that if my dad put the property in my name, the trustee would find it & we would probably lose it. What are some options?

Answer 1

Just out of curiosity, you are willing to see your parents go bankrupt? If not, why wouldn't you move out of the house and let them sell it to help pay down their debts?

Answer 2

Changing ownership at the last minute triggers tax consequences, potential fraud charges, etc.  You have to record every asset you have disposed of in the last 3 years.  

You and your husband need to purchase the property at fair market value (arm's length transaction), get a mortgage and purchase outright, or do sale on contract with monthly payments directly to your father, and let your father use that money for living expenses.  It would forestall bankruptcy for him while he looks for another job, and you keep the house by purchasing it from your father.

Otherwise, the house has to be sold and the money will go to creditors, and you need to find another house to rent or purchase.

Answer 3

Sell the house.

Answer 4

The bankruptcy court will check all previous sales and when it comes up that he recently transfered the house to you they are going to nail him hard because they will know why he transfered it.   So you better have one h**l of a reason for him to transfer that house to you.

The way the bankruptcy court see's it is he could sale the house to pay his debts.

If your father owes you money he could give you the house to pay that debt but he would have to owe you a significant amount.

Now if your parents only have 7 years left on their house if they can sell the house and profit more than $75K they can't file either.  Because once again the courts see that as being able to pay your debts.

Answer 5

The lawyer is right. If they find out then it won't matter who's name it's in. He would be, in effect, hiding assets.