Should I Quit Claim Deed My Home to My Son? – Sarah

“Dear Steve,

I have a home that I am in the process of a short sale and a large amount of unsecured credit lines. I also have a home that has quite a bit of equity in it but can’t sell. I am in the process of modifying the loan on the house with equity and have gotten some initial feedback from WAMU that they might help me.. I am current on all debts right now but running out of money due to job loss.

I want to sell or quit claim the home I own that has equity to my son’s corporation. I am out of work and don’t want the banks to be able to get a judgement and take that house. Can I sell that home to my son or is there another way to shield that equity. I also have it for sale but no bites even at reduced price.

Sarah”

Dear Sarah,

A quit claim deed does not remove the underlying loan obligations secured by the property. And issuing a quit claim deed against the property you may accelerate your mortgage making it all due and payable right now. This is not what you want to have happen. You are playing with fire when you are trying to be tricky.

The quit-claim strategy might work as part of a larger solution where you sell your home to your son for a below market rate and he obtains new financing for a new mortgage. But in that case you’d want to use a better quality of deed anyway.

If selling the house at a below market rate does not resolve your problems, you could find yourself in big trouble if you go bankrupt in the next couple of years following the transfer. The sale can be reversed by the court and get you in trouble.

If you have other creditors chasing you now, you might be better off doing a Chapter 13 bankruptcy and let your son help you with the mortgage payments than any sort of trickery. Once WAMU agrees and you can find a buyer you can then remove the home from the protection of the bankruptcy, discharge the rest of your debts, if possible and move on.

The best advice would be for you to schedule a free bankruptcy consultation with a local bankruptcy attorney and discuss it with them.

Sincerly,


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
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