QUESTION
Asset Protection from a Deficiency Judgement - that has NOT been filed yet - how to protect property & cash NOW - I live in California?
Asked on Feb 28th, 2018 on Bankruptcy - California
More details to this question:
Asset Protection from creditors. I am concerned about a Deficiency Judgment which may be filed against me personally for $765K My husband died and soon I will not be able to pay the lender on an investment property because tenant is vacating. Currently I have excellent credit. I own another property No.2 with $900K in equity. I need to protect the $900K. Can I put property No. 2 in a Irrevocable Trust or sell property No. 2 and buy a $900K home ( CA protects personal home from creditors, does that include a Deficiency Judgment ? ) Or sell property No. 2 and put the money where?
1 ANSWER
Bankruptcy Attorney serving Burbank, CA
Partner at
Law Office of Mark J. Markus
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3 Awards
Transferring the property to a Trust would be a fraudulent transfer which can be recovered by creditors or a bankruptcy trustee for up to 8 years from the date of transfer.
You can sell the property and buy a new home, but assuming California's exemption laws apply in your case (depends on where you have lived the past 2 years), the maximum homestead you would have is $175,000 if you are over 65 or disabled. Otherwise it would be $75,000. Either way it's way less than $900,000 so there's no way you would be able to protect that much in a Chapter 7 case. Your only other bankruptcy option would be to do a 100% repayment plan in a Chapter 11 case, assuming you end up owing $765,000 from the deficiency.
Answered on Mar 01st, 2018 at 1:25 PM