Expert: Michael Brotherton - 1/30/2009

Question
the property i live on-my home and cottages i rent out- was left to my sister and myself in a living trust in 1999.  she took her name off the deed later that year- so it has been in my name alone since 2000.  do you know if it's possible to put her name back on- take mine off- and declare bankruptcy myself after some period of time?  I know it's a strange question.  I'm in Wisconsin if that matters.  Thank you for your help.

Answer
It is not a strange question. In fact, it is fairly common for someone considering bankruptcy or one who is being pursued by a creditor to want to remove an asset from their name in order to file bankruptcy or avoid attachment of that asset, however, it may be considered an illegal act of diversion and if a creditor or the courts see that assets were diverted to avoid paying a debt it may be reversed or worse yet you may be sanctioned by the courts. A creditor may object to discharge of your bankruptcy for this reason.

Question- How was the property deeded when you inherited the property? I am a bit confused how the property was deeded to begin with since it was in a living trust? How was the property bequeathed to you from the trust and under what conditions? What was the mechanism used to do this? Sorry for the questions but it may be relevant.

You would need to seek legal counsel locally from at least two, possibly three, "experienced" bankruptcy attorneys to determine whether you may qualify to file bankruptcy under your current circumstance or whether you may legitimately "sell" the property back to your sister and wait a period of time to file.  There should be a legitimate way of dealing with your problem without losing everything. Maybe Chapter 13 would be another way to go. It could lighten your load and help you to keep your property.

Try to get a referral for the attorneys. Bad attorneys are a dime a dozen and not all attorneys give good advice. Proceed with caution.