Can I form a corporation and deed my house over to it? What happens to my psnl credit if the house forecloses?

Question

I am in a situation where I will seeemingly soon face foreclosure. I watched an info-mercial on setting up a corporation and getting corporate credit. The idea was to stop doing as much as possible in you personal name. Including filing for bankruptcy, etc. My ultimate scenario would be to (1) form a corporation, (2) put the home in the name of the corporation, and (3) have the corporation file bankruptcy , (4) dissolve the corporation. I am wondering if this will affect me porsonally at all.

Also, I am looking to form a seperate corporation strictly for obtaining up to $500,000 in corporate credit. This would be to help my wife and I start two businesses (1) a shoe boutique for her and (2) a lounge/bar for me.

Answer 1

If you are looking to transfer your home into the corporation you may be able to transfer title (I am not a Lawyer), but you will not be able to remove yourself from the Mortgage on your home along with the personal obligation you have to repay the loan. Your best bet if you are going to be looking at foreclosure is to deliver a deed-in-lieu or to find another way to avoid foreclosure (contact your lender early and often)

Setting up a corporation, you will find that until you are well established, you will need to have a personal guarantee on your business loans and mortgages and this will also be based upon both your business plans and performance as well as your personal credit and finances.

Answer 2

What you are attempting to do is too late since you have already purchased your home. You may transfer the title of the house to a corporation, but the loan is in and will still be in your name and that of your spouse if you have one that signed the loan docs.

You have to get the loan in the name of the corporation in order for the lender to recognize it as the owner of the house.

If you have a new corporation and the new corporation does not have a credit history or money in the bank or a method to make money to pay for the monthly mortgage, the lender might still allow the corporation to purchase the house and sign the loan docs in the name of the corporation, but they will want you and your credit on the mortgage also. This is called a recourse loan. If the corporation can or does not pay the monthly mortgage the lender will then come after you for the monthly mortgage payment.

In order for the lender to allow the corporation to be the sole signer only if the corportation has established credit, earning money of some sort, has money in the bank. You see the corporation has to qualify for the mortgage as would an individual. This is called a non-recourse loan.

Now about those infomercial you are watching. They are half truthful, but do not really lie because I think they can be sued it they out and out lie.

Think of it like this.

If you were a kid that just finished high school, have diploma in hand, no job, have not established credit and can not prove that in the next 15-30 days you will have one.

Now walk into a bank and ask to borrow $500,000 to purchase a house. Well we all know what the banker is gonna tell you, don't we?

Now go get your father who has is working and has worked for a number of years, can prove his income, has money in the bank, an excellent credit report. He might even know the banker and the banker know him by his first name.

This now make your application look a lot better.

The same applies with a brand new corportation, no credit history, no way of making any money and is a brand new enity on the block. Now if you gurantee the loan it is a different story.

Now if you allow the corporation to grow, the corporation is allowed to earn money on a regular basis and can prove it by corporate income taxes, has a Dun & Bradstreet Credit report with a proven track record, corporate funds in a bank.

Now what do your corporation look like. The lender now have a different outlook on the corporation.

I understand that the commercials state you can get from $200,000 to $500,000 in corporate credit. Find out what banks, what you can use the funds for and how long it take.

More to the point how much is this service gonna cost you? Are there any up front fees, interest rate, terms and method of payment.

You might think long and hard about using these funds for a start-up business and two at that.

Do your due deligence find out if there is need for the services you want to offer. Break even point, do you still have to work? You will not come close to earning enough to pay the monthly payments on a $500,000 loan in a lounge or a shoe store (boutique) for at least 12-18 months if that soon.

I hope this has been of some use to you, good luck.

"FIGHT ON"

Answer 3

First of all, if he is on the mortgage but not the house that is his mistake. If you are on the house but not on the mortgage, that is the lenders mistake. Sitting on your assets and doing nothing is your mistake. Bottom line is you have a h*ll of a mess brewing. You need to get the house refinanced and the other loan paid off. 3 months is more than enough time to cause foreclosure to start. If you are married and he has abandoned you, you have a lot more to worry about than just the house. Having said that, there is a chance to make money on the house, lemonade from lemons so to speak. Go ahead if you can and refinance it. If you are not on the current loan, but have the authority to talk to the lender, see about a loan assumption unless the terms are horrendous. Even so, you may be able to assume it and then "streamline" refi the mortgage if FHA and not incur all the typical mortgage costs. But the mortgage must be current to do that. If he has issued to you a Quit Claim Deed you are good to proceed, he is no longer on the deed. Get it recorded ASAP. And work with the current lender for a solution. You may be able to make a profit out of this yet by selling the home and getting a fresh start. It would be a small consolation for the remainder issues of a marriage breaking up. ***Thought: Even though the husband is on the note but you are not if the home is repossessed and you apply for another loan, when they ask YOU the question "Have you ever had a home or car repossessed?" the only truthful reply is "yes". The home is your responsibility and even though you are not on the mortgage, you did have an ownership in the home and allowed it to be repossed due to non-payment of the note. That will have to be explained to a lender's underwritting department. How they will respond? In a slowing real estate market with rising repossessions, probably not positively for you. Good luck and get going.

Answer 4

Corporation Deed

Answer 5

Your mortage is a secured debt, if the payments are not made, it will be foreclosed on, regardless if it is in your name or the corporation's name.

You should consult a Bankrtupcy Attorney.

You may keep your home if you continue making payments, it will be respossed if you do not. Filing for bankruptcy might delay it, but will not stop it. You can reaffirm the debt after filing for bankruptcy and keep your home, but you must make the payments.

The Bankruptcy laws are modified by state and local laws, and you may have more or less rights to keep things in different areas, so you really need to contact a Bankruptcy Attorney in your area.

If you file for Chapter 7 Bankruptcy, all of your non-secured debts such as credit card and medical debts may be discharged (they disappear). So Pay the secured debts such as mortgage and automobiles, but not the credit card or medical bills.. Don't take out any new debt except medical as necessary.

You can usually get an initial consultation with a bankruptcy attorney for free, but they will want cash in advance to file for you.

Answer 6

form corporation deed house psnl credit house forecloses

Answer 7

Don't believe in the infomercials. If they were true, we would all be rich and spending our weekends on yachts surrounded by beautiful women.

Sorry to hear about facing foreclosure. I think it is best to consult with an attorney in your state about this corporation idea as state laws vary.

Also, some state laws have "homestead laws" allowing you to keep your house even if you file for bankruptcy, again, state laws vary so contact your local attorney.

Also, if attorneys fees are a problem, consult your local volunteer attorney program, some attorneys will be willing to help you out pro bono.