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.
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.
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.
Sincerely,
Michael Avanesian
Law Offices of David A. Tilem
www.tilemlaw.com
818-507-6000
On Mon, May 19, 2014 at 12:29 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
>
> > ******************************************************
>
>
>
>
>
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.
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.
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.
Sincerely, Michael AvanesianLaw Offices of David A. Tilemwww.tilemlaw.com
818-507-6000
On Mon, May 19, 2014 at 12:29 PM, 'Steven B. Lever'
sblever@leverlaw.com [cdcbaa] <
cdcbaa@yahoogroups.com> 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
>*
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