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Transfer of Deed--will it help?


David20
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My divorce will be final in 45 days.

I am upside-down on the house note and it has appraised for $20K less than the balance of the loan. My estranged wife wanted to remain in the house. Her attempt to refinance the note in her name failed, supposedly because of the discrepancy between the appraisal and loan balance.lThe bank supposedly told her that upon the divorce becoming final, a transfer of deed will release me from the loan. She has always handled all of our financial matters and I had no reason to doubt her. I have been giving her money to make the notes. Upon running a credit report a couple of days ago, I found , among other things, that she has not made payments in 5 months and the property is in pre-foreclosure.

If I thought I could be released from the note when the divorce is final, I would try to borrow the money to pay the back notes to keep the house from being foreclosed. But, if a transfer of deed will not release me from the note, I would be at square one....upside down on a note that I can't afford to pay on my income alone.

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In a bankruptcy, the only thing the transfer of the deed will do is take your name off the asset, one less to report. However, it is NEVER a good idea to transfer assets before you file BK, it can and likely will be seen as a fraudulent transfer and the Trustee will go after it anyway.. and you. A Trustee has a look-back period of up to 10 years for asset transfers. Most don't go much further than maybe 3-4, but anything in the 12 months prior to filing will raise a big red flag -- and you don't want any of those.

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I can tell you that here in PA my Trustee has said he can go back four years for fraudulent transfers. I am living that nightmare right now. I had sold my home below market value a year and a half before filing BK. I had a deadline to get my exhusband off the mortgage due to our divorce settlement. The house was going into foreclosure, so rather than be out on the street with my child,(which would have affected the child custody), I sold the home to a family member, who has allowed us to rent from him. I continued to struggle with my debts, i am disabled, and eventually filed for BK. My lawyer found a loop hole around the "less than two year" rule on property sales, so now the Trustee is using the "Fraudulent Act" guidelines and keeps saying he can go back four years.

Trust me, you definetely don't want to take that gamble with the transfer. It will open up a whole can of worms. Good luck to you with your situation, I hope you find the right course of action.

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