I live in NY State. I recently took a home equity line of credit on my investment property. I used that amount to pay off the balance on another home…the one I live in. Now, I’m finding out I’m still unable to get my financial situation under control so I’m considering bankruptcy. If I file for bankruptcy will I be able to keep the home I live in or will it be taken away ( especially since the only reason it’s paid off is because I used the line of credit from the other property)?
Thanks
Let me clarify the question:
Will I be allowed to keep the home that I live in?
More INFO: I’m retired and have no income but what I get from my investment property….yet that’s not enough to pay the bills.
If you file BK, there is a law that talks about "preferential transfers." Here you took equity out to pay debt of another. The lender who could be stuck with the bad loan can claim it was a preferential transfer and attempt to ask to the court to foreclose both homes in order to be repaid. The transfers are generally looked 90 days and sometimes up to 12 months back on everything you did.
I would highly seek the advice of both a BK attorney and an asset protection attorney to help you.
Good Luck!