HOW WOULD THIS AFFECT BANKRUPTCY

[txls]

Jurisdiction

Louisiana

My brother owns a home that is our family gathering place when we all come in from out of town. He's going through financial difficulties and is considering bankruptcy. I don't want him to lose the place so one possibility is for me to purchase the home. I don't know if that will help enough for him to avoid bankruptcy or not. Would this present a problem if I purchased the place and later he were to go ahead and file bankruptcy. I don't think he has much equity in the home but I'm not sure or if that matters.

 

[army judge]

My brother owns a home that is our family gathering place when we all come in from out of town. He's going through financial difficulties and is considering bankruptcy. I don't want him to lose the place so one possibility is for me to purchase the home. I don't know if that will help enough for him to avoid bankruptcy or not. Would this present a problem if I purchased the place and later he were to go ahead and file bankruptcy. I don't think he has much equity in the home but I'm not sure or if that matters.

Yes, you could purchase the home without impacting his ability to file bankruptcy next month, or next year.

You could then place the home in a trust.

Some people use family trusts to protect their assets.

After you purchase the home, you could allow him to remain there rent free, if you so desire.

Whatever you do, you should do so with a written lease agreement.

 

[txls]

Thank you!

 

[adjusterjack]

Would this present a problem if I purchased the place and later he were to go ahead and file bankruptcy.

It wouldn't be a problem unless you purchased it below market value and the bankruptcy court sees it as a fraudulent transfer. He'd be safe starting with market value and reducing it by the amount of real estate commission he wouldn't have to pay.

I don't think he has much equity in the home but I'm not sure or if that matters.

It would matter because any money he realizes from the sale has to be reported as an asset on his bankruptcy papers. If it's significant it might disqualify him from Chapter 7 and drive him into Chapter 13 where he would have to pay off his debts to a great extent.

Of course, if the amount of equity was significant it might get him out of financial trouble so he wouldn't have to file bankruptcy.

If you are going to do this I suggest you carefully examine your brother's finances from top to bottom.

 

[txls]

Thank you. I don't know much at all about bankruptcy but I knew there was something about hiding assets. We won't do anything definite without getting a lawyer but just kicking around possibilities right now.