Q: My mother and I purchased property in Alabama with 5 mobile homes on it. How can we protect property if mom files chap7
We are both married and we each have our own mobile home on the 8 acre property and the other 3 mobile homes have family members residing in them and they all pay one towards property tax and insurance and any other expenses that are for the property. Just don’t want all of us to lose our homes due to mom and dad filing chapter 7. Also I am on social security disability and my parents are on social security as well.
If your mother files Chapter 7 bankruptcy, you will be in a legally conflicted position as regards her interests in obtaining a discharge and as regards the "bankruptcy estate" created by operation of law upon filing. A Chapter 7 Trustee will be assigned to her case who has the duty and ability to liquidate any property that she owns or co-owns which cannot be "exempted" in her petition by her bankruptcy attorney.
Whether that will be the case or not, you likely won't know until her bankruptcy matter is filed, unless she and her attorney choose to communicate these things with you prior at their prerogative.
You will have no legal role in her bankruptcy case, and her Ch 7 Trustee will do what he/she can do to rescue payment for her creditors from her assets.
Her bankruptcy attorney will not be your attorney and will be duty-bound under ethical guidelines to represent her interests specifically.
If she files a Chapter 7 bankruptcy and you hear from a Chapter 7 Trustee, you should seek an immediate consultation with a local bankruptcy attorney to protect your interests.
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A: The only way to protect your interest in the property from your mother's creditors or your own is to transfer it to a legal entity such as an LLC or an irrevocable Trust. The transfer to the Trust or LLC is still an asset in a subsequently filed bankruptcy for two (2) years after the transfer, if a Chapter 7 case is filed. In addition, the state's fraudulent transfers statute may extend that time period out for up to as much as four (4) years, and possibly more ( each state can set its own time perameters). If the property is transferred to an LLC, the members of the LLC will still have some personal liability to personal creditors as far as the property, and that also varies from state to state. Some states provide more insulation from creditors under their LLC statute than others. The bottom line is to consult an experienced bankruptcy attorney who can review your own particular, unique set of facts, and advise you on what the best options are.
Timothy Denison agrees with this answer
A: You need to consult an experienced bankruptcy attorney who can represent your interests, which will be divergent from your mothers if she filed bankruptcy. The best solution is to transfer it to an LLC or other legal entity and wait the two years to avoid the preferential transfer. This is a complex issue you should not tackle by yourself.
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