Zeb,

You are correct. Patterson goes against you. The Trustee is a hypothetical lien holder or "bonafide purchaser for value".

Think of it this way. . .

1) the recording of the deed by you now as opposed to 6 years ago may be voidable by the Trustee under bk law.
2) If voidable, it is like it never happened.
3) Forget the bk for the moment. If the title is solely in your wife’s name, regardless of the understanding between the two of you, she could sell the property to an unsuspecting buyer or could use the property as collateral. The buyer or lender would not be subject to the agreement you had with your wife and your only recourse would be to seek damages from her. The buyer or lender would gain the interest in the home free of your claim to it since it was titled (via the public records) to your wife. This is the argument of the Trustee as he can step into the shoes of a hypothetical bonafide purchaser or lender.

Just because the Trustee wants to settle for $15,700.00 does not mean he wont take something less and/or take the amount on terms. Why don't you go back and offer $10,000.00 with payments, say, over 2 years? You can even offer a lien against the home to protect the Trustee's interest. This is a negotiation. As difficult as it is, you need to take the emotion out of the equation and just look at it in terms of a business deal.

Des