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Client with Big Homestead Exemption Moving to Oregon-- Can They Make a Mortgage from Their Own Retirement?
charsetndows-1252
Before you plan on that, make sure the 401k allows loans for Debtor's owned real estate. It may not.
Jason Wallach
jwallach@gladstonemichel.com
On May 19, 2014, at 7:07 PM, 'Steven B. Lever' sblever@leverlaw.com [cdcbaa] wrote:
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> Michael;
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> The California exemptions apply to the Oregon home as you use the state from whence you came for 2 years. So I think the law and the math or on our side there.
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> My thinking on the loan from the 401K or other ERISA qualified plan that wed borrow from and secure the transaction is really a loan from the Debtor to himself, and so would the Trustee have to honor the security agreement just like it was a loan from a bank?
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> I dont see why not. A loan can come from a friend, family member or bank. On the other hand, is a retirement plan separate enough from the debtor?
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> Steve
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> Sent: Monday, May 19, 2014 2:16 PM
> To: cdcbaa@yahoogroups.com
> Subject: Re: [cdcbaa] Client with Big Homestead Exemption Moving to Oregon-- Can They Make a Mortgage from Their Own Retirement?
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> I have no experience with what I'm about to reply with but I have been thinking about this fact pattern for a long time now. I think that if done properly, the loan from the 401k can become a PMSI on the new house and that Oregon law would apply to whether that happens.
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> My concern is with the $140k in exempt money. That exemption only lasts for 6 months. If reinvested in a home in California, the California exemption would prevent the Trustee from getting the money. Exempt to Exempt transaction.
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> The Oregon exemption is 50k (I googled, so maybe wrong). So 90k of the equity in the new home would not be exempted by Oregon law. How are you going to prevent the Trustee from saying he wants the 90k that is no longer exempt as soon as the new home is bought? -- the 6 month period expires as soon as the exempt money is used to buy any other property.
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> Sincerely,
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> Michael Avanesian
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> Law Offices of David A. Tilem
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> www.tilemlaw.com
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> 818-507-6000
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> On Mon, May 19, 2014 at 12:29 PM, 'Steven B. Lever' sblever@leverlaw.com [cdcbaa] wrote:
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> Listmates:
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> I have clients for whom Im filing a Chapter 7 case who live in Orange County.
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> They want to move to Oregon. They sold their house and will have $140,000 in cash from the sale later this summer.
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> The husband lost his job and the credit score is going downhill.
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> They are moving to Oregon and want to reestablish themselves there. I will file them in OC before the 90 day venue period has elapsed (greater part of 180 days is within first 90 days).
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> The house they will buy up there to reinvest their homestead exemption amount will cost about $350,000, so they need to borrow about $225,000 of that to protect the homestead exemption counting the $25,000 of cost of sale that will protect their house.
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> The source of the $225,000 mortgage loan is problematic since hes unemployed.
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> Im going to look into rolling over his large 401K to a plan that allows him to invest in real estate mortgages. Then his own retirement plan would have an investment in and be a secured creditor in his own residence.
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> Does anyone think a Chapter 7 Trustee could disregard that secured debt because it was from his own retirement plan?
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> Steve
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> Law Offices of Steven B. Lever
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> > Steven B. Lever
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> >( Tel. (562) 436-5456 ext. 1
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> >( Fax (562) 485-6886
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> >* sblever@leverlaw.com
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> > www.leverlaw.com
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> > ******************************************************
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charsetndows-1252
Before you plan on that, make sure the 401k allows loans for Debtor's owned real estate. It may not.
Jason Wallach
The post was migrated from Yahoo.
I can't attest to ch 7 Trustee's considering the equity that could go to pay unsecured creditors as retirement income. But, I can suggest that your clients can safely invest their homestead exemption on property that they share ownership. Maybe someone with good credit?
Law Office of Catherine Christiansen
17011 Beach Blvd. Ste 900, Huntington Beach, CA 92647
Tel: (714) 375-6651 Fax: (562) 490-8572
attorneychristiansen@gmail.com
On Monday, May 19, 2014 12:39 PM, "'Steven B. Lever' sblever@leverlaw.com [cdcbaa]" wrote:
Listmates:
I have clients for whom Im filing a Chapter 7 case who live in Orange County.
They want to move to Oregon. They sold their house and will have $140,000 in cash from the sale later this summer.
The husband lost his job and the credit score is going downhill.
They are moving to Oregon and want to reestablish themselves there. I will file them in OC before the 90 day venue period has elapsed (greater part of 180 days is within first 90 days).
The house they will buy up there to reinvest their homestead exemption amount will cost about $350,000, so they need to borrow about $225,000 of that to protect the homestead exemption counting the $25,000 of cost of sale that will protect their house.
The source of the $225,000 mortgage loan is problematic since hes unemployed.
Im going to look into rolling over his large 401K to a plan that allows him to invest in real estate mortgages. Then his own retirement plan would have an investment in and be a secured creditor in his own residence.
Does anyone think a Chapter 7 Trustee could disregard that secured debt because it was from his own retirement plan?
Steve
Law Offices of Steven B. Lever
>
> Steven B. Lever
>( Tel. (562) 436-5456 ext. 1
>( Fax (562) 485-6886
>* sblever@leverlaw.com
> www.leverlaw.com
> ******************************************************
The post was migrated from Yahoo.
Listmates:
I have clients for whom I'm filing a Chapter 7 case who live in Orange
County.
They want to move to Oregon. They sold their house and will have
$140,000 in cash from the sale later this summer.
The husband lost his job and the credit score is going downhill.
They are moving to Oregon and want to reestablish themselves there. I
will file them in OC before the 90 day venue period has elapsed (greater
part of 180 days is within first 90 days).
The house they will buy up there to reinvest their homestead exemption
amount will cost about $350,000, so they need to borrow about $225,000
of that to protect the homestead exemption counting the $25,000 of cost
of sale that will protect their house.
The source of the $225,000 mortgage loan is problematic since he's
unemployed.
I'm going to look into rolling over his large 401K to a plan that allows
him to invest in real estate mortgages. Then his own retirement plan
would have an investment in and be a secured creditor in his own
residence.
Does anyone think a Chapter 7 Trustee could disregard that secured debt
because it was from his own retirement plan?
Steve
Law Offices of Steven B. Lever
>
> Steven B. Lever
>( Tel. (562) 436-5456 ext. 1
>( Fax (562) 485-6886
>* sblever@leverlaw.com
> www.leverlaw.com
> ******************************************************
The post was migrated from Yahoo.