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Will this work? Using an entity to avoid 1322(b)(2) bar on modifying
Assume an individual purchased a residence together with a wholly owned
entity as cotenants or joint tenants. The entity might receive title as a
"gift" or might contribute money towards the downpayment.
In any case, a few years later, after the property went up and then down in
value in a boom/bust cycle, it now has negative equity.
1. Could the owner cause his entity to file a chapter 11 bankruptcy case
and cramdown on the first mortgage? Since the corporation does not have a
residence, and since the individual who resides in the collateral is not a
debtor in bankruptcy, it appears that section 1322(b)(2) ban will not
apply. Would this planning allow one to avoid both the need to file
bankruptcy and the need to move out of personal residence?
2. Does this have any real property law or tax law implications?
I have not been able to find any cases on this issue.
Alik Segal
Alik.Segal@gmail.com
310-362-6157
California Central District
Assume an individual purchased a residence together with a wholly owned entity as cotenants or joint tenants. The entity might receive title as a "gift" or might contribute money towards the downpayment.
In any case, a few years later, after the property went up and then down in value in a boom/bust cycle, it now has negative equity. 1. Could the owner cause his entity to file a chapter 11 bankruptcy case and cramdown on the first mortgage? l who resides in the collateral is not a debtor in bankruptcy, it appears that section 1322(b)(2) ban will not apply. Would this planning allow one to avoid both the need to file bankruptcy and the need to move out of personal residence?
2. Does this have any real property law or tax law implications?I have not been able to find any cases on this issue.-- Alik Segal
Alik.Segal@gmail.com310-362-6157California Central District
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