Can the owner quitclaim a property during initial filing for Bankruptcy Chapter 13?

Quitclaiming to someone else who is going to file for bankruptcy is a way to delay the foreclosure. By transferring the title to you by quitclaim, the automatic stay that takes effect when you file for Chapter 7 bankruptcy will prevent the bank from selling the house without first seeking permission from the bankruptcy court. It is an abuse of the automatic stay. When you file for bankruptcy your case will be affected by the scheme to have the property quitclaimed to you for no real reason but to take advantage of the automatic stay. The court might deem your involvement to be in bad faith and you could be denied a discharge or who knows what else depending on the circumstances. Your cousin should either dismiss her case if it was only filed to stop the sale or convert to Chapter 7 if she needs to have debts discharged such as credit card bills or a second loan on the house she is about to lose. You should stay away from your cousins problems. She needs to see a lawyer to find the best alternative for her situation and not get you involved in her problems, particularly since there will be little or no benefit to anyone.

If she has equity in the home, she could run afoul of the fraudulent transfer laws. Right now, she is protected by her chapter 13 automatic stay, but if she wants to surrender the home and either dismiss her 13 or convert it to a chapter 7, then the lender will proceed with foreclosure if it is not being paid. If she has no equity and deeds the property to you, she is violating her mortgage terms, but the lender might just want to keep getting paid and may work with you. The better approach here is that she list it for sale and you offer to purchase it through a short sale, where the lender agrees to take less than is due as payment in full, and the real estate professional can confirm that your offer price is the best the market can bear. It is not clear what you mean when you ask "can she really be saved..." You both need assistance of counsel, as this is not something that can be accomplished without someone who knows the full legal effect of what you are proposing.

The answer is a resounding NO. Executing a quitclaim deed can only create more problems as it will be deemed a fraudulent transfer. A quitclaim does NOT transfer the obligation under the deed of trust and note. I HIGHLY recommend your cousin and you call my office to set up a free consultation with me to discuss your options. disclaimer I have been quoted and written about by CBS Marketwatch regarding this and related areas of law. To see some of these articles written about me and my practice, please visit my blog. See below for the link. If you find my answer helpful, please click the ‘thumbs-up’ tab below. Thank you. DISCLAIMER—This answer is for informational purposes only under the terms and conditions. It discusses general legal principles and considerations and is not intended as specific legal advice regarding your question. This answer does not establish an attorney client relationship. Gerald Wolfe Law Office of Gerald Wolfe 19600 Fairchild Road, Suite 295 Irvine, CA 92612 (949)257-0961

Your cousin may be required to get the court's permission to sell the house. You will be required to find a company to finance the purchase. If the sales price is not enough to pay off all mortgages, then the creditors will not agree and neither will the court. A quitclaim deed will cause more problems than it solves and may lead to losing the house anyway. [This communication is intended as general information and not specific legal advice, and this communication does not create an attorney-client relationship.]