As Chicago Bankruptcy attorneys we are often asked whether a house can be sold for a small amount of money to a relative or a friend in order to avoid losing it after a chapter 7 filing.
The answer is no. You cannot transfer property to another person unless you receive its cash value.
This is especially true if you make the transfer to a family member, If you make a transfer and do not receive enough value (ie money) the the transaction can be undone
There are many legitimate ways to protect your family home.
- Check its value on zillow.com. It may not be worth as much as you think.
- look at how you hold title. If its tenants by the entireties, you may want to consider only one spouse filing a bankruptcy.
- use you bankruptcy exemptions. A married couple has a $30,000.00 exemption
- consider filing a chapter 13 rather than a chapter 7. Costs may be more, but you can keep the house.
- remember to subtract the costs of sale. These can equal up to 10% of the value of the house.
- you might want to consider using up existing lines of to make necessary purchases *** use caution as this can get you into trouble ***
The point is there are many legitimate ways to protect your home, but you need to talk to a lawyer who can give you all of the options
