Michael Shanley
Junior Member
What is the name of your state? CA
Person 1 is about to file bankruptcy (Chap 7) and owns a home with some equity, though not large. Person 1 needs to sell the home as they cannot afford the payments. If person 1 sells the home, the likey net from the home would not cover credit card debt. so would be taken by creditors, leaving person 1 with nothing from the sale. An alternative is that person 1 sells to a friend, person 2, in a private sale before the bankruptcy filing, at a modestly reduced sales price--one that leaves person 1 with no net proceeds from the sale, but gives person 2 some instant equity in their new home. Person 2 agrees to share equity with person 1 if he resells the house within a year or two. Thus both person 1 and 2 are better off, but person 1's creditors are worse off. Is this second alternative legal? Will the home sale likely be investigated as part of the bankruptcy, and would person 2 likely be creating legal or financial problems for himself?
Person 1 is about to file bankruptcy (Chap 7) and owns a home with some equity, though not large. Person 1 needs to sell the home as they cannot afford the payments. If person 1 sells the home, the likey net from the home would not cover credit card debt. so would be taken by creditors, leaving person 1 with nothing from the sale. An alternative is that person 1 sells to a friend, person 2, in a private sale before the bankruptcy filing, at a modestly reduced sales price--one that leaves person 1 with no net proceeds from the sale, but gives person 2 some instant equity in their new home. Person 2 agrees to share equity with person 1 if he resells the house within a year or two. Thus both person 1 and 2 are better off, but person 1's creditors are worse off. Is this second alternative legal? Will the home sale likely be investigated as part of the bankruptcy, and would person 2 likely be creating legal or financial problems for himself?