Central District Consumer Bankruptcy Attorney's Association

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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