Quit-Claims and Bankruptcy

[sperry]

My question involves bankruptcy in the state of: New York

My wife and I are getting a divorce(through mediation). As part of the divorce I'm keeping the house and she is going to sign a Quit Claim. The house has has essentially no value. It is assessed for $99,000, we own $88,000, and have a HELOC in the amount of $8,800. That makes the equity in the house $2,200. I'm giving her $2,000 for the house(more than her half of the equity). My wife has considered the possibility of Bankruptcy after I refinance the house and the Quit Claim is signed. I am concerned about how this might effect me. It was suggested to me that a Trustee in a Bankruptcy could claim that the quit claim was fraudulent and come after me for part of the equity in the house or something to that effect. How do I protect myself? Is just having good documentation (tax assessment, mortgage, and HELOC statements) enough? or are there other things I need to do?

[jk]

when you refi the house, that would mean you are going to borrow $96,800 on a home that is assessed at $99,000? For some reason, I'm not seeing this as a reality.

If you can do that, you are allowing her to cash out her equity in exchange for relinquishing title. Unless a true appraisal of the home provided a different value, I cannot see what would be wrong with what you are doing. After all, you will be paying off all the debt that is in her name when you refi the house so she would not be including that debt in her BK.

A trustee will likely review the transaction to be sure it wasn't fraudulent but from what you have said, no creditors would lose anything here and your ex will be paid a fair amount for her interest.