How to avoid private student loans from putting a lien on my home?

[luna2005]

How can I protect my NY home from private student loan creditors? I'm roughly $100k in debt with private and federal loans and they're denying me disability forgiveness (ignoring the fact that I was blatantly lied to by being issued private loans but told they were federal). Please don't judge me, this is hard enough.

The house was deeded to me in my mother's estate and is mortgage-free, I only have to pay taxes. It is in only my name and I have not filed a formal homestead declaration (I believe NY doesn't require it, but maybe it's a good idea anyway?). I am unemployed and unlikely to ever be re-employed, so they have been in default for several years (worst I've gotten is calls, no legal action yet). I'm thinking of moving the deed into my spouse's name only by selling for $1 (thankfully we were married in a state that doesn't make my debts his problem). Or maybe his name being on the property deed alongside mine would protect it?

What are my best options to protect this house? It's so important to me as it was my childhood home and I lost my mother young, and if I have children I'd want them to be able to keep the house and not be forced to sell it upon my death to satisfy a lien. I am not worried about my spouse taking it from me in any future divorce, FYI.

 

[FlyingRon]

A lien won't force the sale. It just means if you ever do sell it, they get their money out of the proceeds.

 

[Zigner]

Why shouldn't your assets be used to pay your debts? Perhaps it's time to consider taking a loan out against the house?

 

[FlyingRon]

Why shouldn't your assets be used to pay your debts? Perhaps it's time to consider taking a loan out against the house?

That's the dumbest advice I have heard in a long time. First off, the loan rate is likely better than he could possibly get for a mortage.
Second, with student loans in default, he may find it very difficult to get a mortgage.
Third, if he can't pay the student loans, what makes you think he's going to be able to pay the mortgage?
At least he'll have a place to live when student loans are in default. He's not going to be foreclosed upon.

 

[Zigner]

That's the dumbest advice I have heard in a long time. First off, the loan rate is likely better than he could possibly get for a mortage.
Second, with student loans in default, he may find it very difficult to get a mortgage.
Third, if he can't pay the student loans, what makes you think he's going to be able to pay the mortgage?
At least he'll have a place to live when student loans are in default. He's not going to be foreclosed upon.

Then maybe our OP needs to SELL the house. Or, perhaps, her husband could help her pay the loans in exchange for living in the house rent free.

 

[Silverplum]

I would never call Zigner's thoughts "dumb."

He's ETHICAL. He won't help people figure out ways to beat the system. He suggests posters do the RIGHT thing.



Sheesh. What a way to start the week.

 

[Silverplum]

How can I protect my NY home from private student loan creditors? I'm roughly $100k in debt with private and federal loans and they're denying me disability forgiveness (ignoring the fact that I was blatantly lied to by being issued private loans but told they were federal). Please don't judge me, this is hard enough.

The house was deeded to me in my mother's estate and is mortgage-free, I only have to pay taxes. It is in only my name and I have not filed a formal homestead declaration (I believe NY doesn't require it, but maybe it's a good idea anyway?). I am unemployed and unlikely to ever be re-employed, so they have been in default for several years (worst I've gotten is calls, no legal action yet). I'm thinking of moving the deed into my spouse's name only by selling for $1 (thankfully we were married in a state that doesn't make my debts his problem). Or maybe his name being on the property deed alongside mine would protect it?

What are my best options to protect this house? It's so important to me as it was my childhood home and I lost my mother young, and if I have children I'd want them to be able to keep the house and not be forced to sell it upon my death to satisfy a lien. I am not worried about my spouse taking it from me in any future divorce, FYI.

Quotacious.

 

[single317dad]

Why shouldn't your assets be used to pay your debts? Perhaps it's time to consider taking a loan out against the house?

Not what I would recommend, but in your defense, it's not even "the dumbest thing I've read" this morning

I would recommend our OP scrape together the paltry sum of $10 every week for the rest of her life and pay that amount regularly on her loans. For less than the cost of two packs of smokes, two pounds of bacon, a case of brand name soda, or a 30-day supply of Norco, one can at least make a small attempt to pay what is owed.

 

[latigo]

As long as you maintain the New York home as your principle place of residence it will be exempt from execution upon a money judgment secured by your mentioned student loan creditors. The amount of the statutory exemption ranges from $150K to $75K depending on the county. See: NY CPLR Section 5206 et seq. (There is a source that mentions the doubling of the exemption for married couples, but no citation was given and I haven't found it. For confirmation consult with your New York attorney.)

Also the homestead exemption will continue after your death for the benefit of your surviving spouse and surviving children until the age of majority of the youngest surviving child and until the death of your surviving husband. That is, as long as it is their principle place of residence.

You mention transferring the property into another name as a means of avoiding the creditors. There is a slight problem with doing that. Which is that should it render you judgment proof/insolvent, it could be set aside as made in fraud of creditors. (see: NY Debtor Creditor Law Section 270 et seq.)

Moreover, it would be a stupid idea!

And you are correct that as it stands now hubby couldn't get his hands on it in a divorce proceeding. Nor any of your sole and separate property.
__________________________________

You write that you are presently unemployed and unlikely to ever be re-employed? Would it seem impertinent to ask what you did with your college education that someone else paid for?

 

[FlyingRon]

I would never call Zigner's thoughts "dumb."

He's ETHICAL. He won't help people figure out ways to beat the system. He suggests posters do the RIGHT thing.



Sheesh. What a way to start the week.

How is defaulting on one loan more ethical than defaulting on the another?

 

[Zigner]

How is defaulting on one loan more ethical than defaulting on the another?

The OP's not going to default on the house. If the OP DOES default on the house, then there is security for the lender.

 

[Silverplum]

Because then, finally, she would have some skin in the game.

 

[davew128]

I would never call Zigner's thoughts "dumb."

He's ETHICAL. He won't help people figure out ways to beat the system. He suggests posters do the RIGHT thing.



Sheesh. What a way to start the week.

Ethical may not always be legal. Legal may not always be ethical. As this is a legal advice forum, people seek the latter rather than the former. On occasion the two meet.

 

[latigo]

Ethical may not always be legal. Legal may not always be ethical. As this is a legal advice forum, people seek the latter rather than the former. On occasion the two meet.

Did you compose that bit of philosophical babble all by your natural born self, of did a diseased squirrel assist you?

 

[davew128]

Did you compose that bit of philosophical babble all by your natural born self, of did a diseased squirrel assist you?

I used the two brain cells I have that you do not.