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Preference analysis
Sam and Pat, thanks for your thoughts.The first trust deed on the property, which was there at the time of the September transfer, is for $425,000. After refinancing, the debt is about $510,000. So I can homestead the condo.I hadn't thought of a chapter 13. That may make sense; there is a creditor who seeks a writ of attachment before judgment. Otherwise, it's wait until September.- John
On Wednesday, June 8, 2016 9:58 AM, "sam@southbaybk.com [cdcbaa]" wrote:
I assume you are planning to wait until after September to file so as to avoid the preferential transfer question. But you say he "owes" $425k. Did he owe $425k at the time of the September preferential transfer - or is that the amount he owes now after refinancing and withdrawing $80k? If it is the amount he owes now, then he presumably owed closer to $340k at the time of the September transfer. Assuming your home value is correct as of the transfer date, the value of the transfer was 1/2 of $285k (around 142,500).The excess value receivedby Mom in September could be used to support a fraudulent transfer theory - especially ifthe Trustee could establish a higher value on the home, or ifthe advances from the mother are notwell documented. Those facts, especially when combined with the refi, could be challenged as a scheme to defraud creditors by bringingDebtor's interest below the homestead amount and allowing him to file bk without the home being sold.ed if for no other reason than to extract a settlement. I would consider chapter 13 if possible.
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Hello folks:My current client dropped a bombshell on me: in September 2015, he deeded his $625,000 condo to himself and his mother as joint tenants. He owes $425,000 on it, so this was essentially a $100,000 transfer to the mother.Fraudulent transfer? No, because his mother has advanced $120,000 to him over the last two years. He spent this money on living expenses.From May 2015 to today, mother has given him roughly $5,000 per month for living expenses.In December 2015, mother and son refinanced the house, taking out $80,000. The bank wrote two separate checks: $40,000 each to mother and son. The son's money again was used for living expenses; it's gone now.My question: is the December 2015 transaction going to be seen as a preference? Or will it be ignored, because a. the preference really took place in September 2015 when the son deeded the house to mother, and b. the $40,000 refinance check went from the bank to the mother without passing through the son's hands?Any and all observations will be helpful here. Thanks.- John D. Faucher818/889-8080
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