May have to go bankrupt?
I am wondering how to protect my property from creditors. Husband died recently and left cc debt in my name. Now I am having a very hard time paying all of them. If I sell my house to a relative and finance it for them and then just pay them rent, will that keep the creditors from taking it? Some states do have a law that protects the creditors so they can take your assets if you cannot pay them.
This is called sale and leaseback. But I don’t recommend it because then you lose control of what was essentially your property. It is no longer yours. I would not like this.
As far as the credit cards go, I know that many people in credit card trouble have negotiated with the companies who then settle for a lot less in order to get ’something.’
There are companies that specialize in doing this on your behalf. I think this would be a much smarter approach.
August 2nd, 2010 at 4:39 amCredit cards are unsecured debts. Even if they file suit against you they will not be able to take your house. In most states your home is exempt from bankruptcy (as long as the mortgage is current) and even if it’s not they can only put a lien on it meaning they don’t get paid until you sell.
Putting the house in a relatives name is a very bad idea. You must provide a financial statement listing all of your assets so the court can decide who gets what. If you get caught hiding even a single asset the court will wonder what else you are hiding. Your entire bankruptcy could be rejected based on an your having committed fraud and they might even seize assets they otherwise couldn’t have.
August 2nd, 2010 at 4:39 amSale & leaseback with a relative will likely not protect your house. It must be an arms-length transaction, and all the proceeds of sale would have to go to paying off debt. End result: you do not own a house, you are a renter. Some states protect a homestead up to a certain value. But if it is mortgaged and you cannot pay the mortgage, good-bye house.
Where’s your husband’s life insurance? Other assets? If those credit cards had been in his name, the bills would have gone to probate court to be paid out of his estate (if any). Since they are in your name, you are liable.
Consider that you might be better off selling the house and getting an apartment, condo or smaller house now. Property taxes are rising ferociously everywhere, energy costs are going up, and you might not really need the space or the budgetary hassles of trying to maintain a house now. And of course, you might have to sell it anyway under bankruptcy court order. If so, you might as well do it yourself and avoid all the bankruptcy court costs, credit damage, etc.
August 2nd, 2010 at 4:39 amJust quit paying them, then take most of your money out of the bank. Don’t bother paying the crooks if you can’t. They don’t care if you died tomorrow.
August 2nd, 2010 at 4:39 am