Author Topic: Chapter 7 payback  (Read 2076 times)

0 Members and 1 Guest are viewing this topic.

deepkimchee

  • Valued Member
  • Posts: 688
Chapter 7 payback
« on: May 14, 2015 08:23:20 PM »
In order to file chapter 7, I have to pay back the secured creditors (second mortgage) the amount of the equity in my home which is 40,000.

How do they expect that money.  Lump sum?  Over a five year period, like a 13? Or what the trustee deterimines how much I can afford? 

I'm trying to avoid a 13 if I can.
I refuse to let a piece of paper intimidate me

My statements are educated/non-educated guesses, not legal advice

kevinmanheim

  • Valued Member
  • Posts: 11515
Re: Chapter 7 payback
« Reply #1 on: May 14, 2015 10:27:08 PM »
Depends on your state, and the lender's willingness to work with you.

How do you know you have $40,000 in equity? What is that based on?


deepkimchee

  • Valued Member
  • Posts: 688
Re: Chapter 7 payback
« Reply #2 on: May 14, 2015 11:05:01 PM »
I used the last comparable (argumentive) house three miles away as a comp.

  I also forgot about the 30,000 homestead exemption.  Of course alot would depend on my house appraisal.  The court trustee's realtor will dispute my appraisal if it is low no matter what.  I have a conflict of interest with that realtor  :vbbiggrin:
« Last Edit: May 14, 2015 11:11:51 PM by deepkimchee »
I refuse to let a piece of paper intimidate me

My statements are educated/non-educated guesses, not legal advice

kevinmanheim

  • Valued Member
  • Posts: 11515
Re: Chapter 7 payback
« Reply #3 on: May 15, 2015 01:49:47 AM »
A trustee will use a quick sale valuation. Not a comp from a normal sale.

Your home is probably worth much less in that situation.

despritfreya

  • Valued Member
  • Posts: 53
Re: Chapter 7 payback
« Reply #4 on: May 15, 2015 02:44:00 AM »
I doubt that OP is correctly explaining what is going on. 

If the Chapter 7 Trustee is looking at the home, the Chapter 7 Trustee must believe there is more equity in the home than is allowed under whatever exemption law OP used. 

OP is probably not paying back his mortgage lender a lump sum amount.  He is probably attempting to buy back the equity from the bankruptcy estate by paying the Trustee a lump sum amount.  Maybe he wants to access some sort of HELOC for the purpose of paying the Trustee.

If there is equity in the home that a Trustee is looking at, you would not be trying to pay down a mortgage as that would simply increase the equity - making the property more valuable to a Trustee.

OP, please re-state what is going on and what you are trying to accomplish.

Des.

deepkimchee

  • Valued Member
  • Posts: 688
Re: Chapter 7 payback
« Reply #5 on: May 15, 2015 03:48:02 AM »
I'm basically trying to wipe out my heloc or get the payment as cheap as possible. The Heloc (interest only) is ready to re-set next year.

  I was very close to filing BK last year, then a house on my block sold for 200,000 more than the last house on my block. Instant equity for me as they are tract homes. They use comps from normal sales in my area. 

I live in an area where demand is high and inventory is low.  A year has gone by and that makes the sale on my block null and void as far as comparables go and more recent sales more relevent.  Of course this will probably be argued.  The realtor who usually argues these situations, I have a conflict of interest with.  BK attorneys hate this guy.

Theres more to it but long/short, I am trying to avoid a 13, file a 7 and pay creditors, (heloc) the amount of my equity.  This amount should be around 10,000 with my homestead exemption.

So my question is: would they force me into a 13 for that amount, or how do creditors get the money they would otherwise get in a 13?

 




I refuse to let a piece of paper intimidate me

My statements are educated/non-educated guesses, not legal advice

despritfreya

  • Valued Member
  • Posts: 53
Re: Chapter 7 payback
« Reply #6 on: May 15, 2015 04:08:24 AM »
Unfortunately you still are not making sense.  If you are trying to utilize bankruptcy to force a reduction in what you owe on your HELOC you can forget it unless. . .

1.  The home IS NOT your principal residence

OR

2.  If it is your principal residence there is ABSOLUTELY NO value in the property in excess of what you owe on the 1st. 

If there is ABSOLUTELY NO value in the property in excess of what you one on the 1st and this IS your principal residence then, as it sits right now, you would have to file a Chapter 13 (or Chapter 11 if over the debt limits of a 13) to attempt a strip off of the 2nd.  If you wait until the USSC rules on a pending case (decision probably will come out in June) then maybe you will be able to do the strip off in a Chapter 7. (Noting that such strip offs are currently allowed only in the 11th Circuit.)

And, by the way, unless your state homestead exemption comes ahead of a consensual lien (I doubt it does), a homestead allowance has no impact on this issue.

I strongly recommend you talk to a bk attny.

Des.

deepkimchee

  • Valued Member
  • Posts: 688
Re: Chapter 7 payback
« Reply #7 on: May 15, 2015 04:22:30 AM »
Basically BK law states one may file chapter 7, if you have equity or valuable assets you creditors would have to be paid the same as they would get in a 13.

My assets are 10,000.  My 30,000 homestead does come into play in this situation.

In any event, I am curious to learn more about the USSC rules and the pending case coming out in June.  Any more information on that?
I refuse to let a piece of paper intimidate me

My statements are educated/non-educated guesses, not legal advice

despritfreya

  • Valued Member
  • Posts: 53
Re: Chapter 7 payback
« Reply #8 on: May 15, 2015 04:31:05 AM »
Basically BK law states one may file chapter 7, if you have equity or valuable assets you creditors would have to be paid the same as they would get in a 13.

It is clear you have no real understanding of bankruptcy and what "chapter 7 reconciliation" means.  Might I suggest you meet with several bk attnys?  In the meantime, Google the term.

Des.

Jersey No Neck

  • Valued Member
  • Posts: 267
Re: Chapter 7 payback
« Reply #9 on: May 15, 2015 12:25:32 PM »
Besides the trustee will send a realtor to your home to get an idea, that's what they did with me.  I also compared the house next to me and he wanted to see for himself.

despritfreya

  • Valued Member
  • Posts: 53
Re: Chapter 7 payback
« Reply #10 on: May 15, 2015 12:45:29 PM »
Besides the trustee will send a realtor to your home to get an idea, that's what they did with me.  I also compared the house next to me and he wanted to see for himself.

I don't think Deep's issue is with the trustee, but who knows.  I think, by the subsequent posts, he/she believes that he/she can pay to the 2nd mortgage the value of his/her non-exempt property ($10k) and, once paid, be entitled to a release of the 2nd.  If that is what he/she thinks, he/she is in for a "rude awakening".

However, if the equity in that home is over the allowed exemption (which appears not to be the case due to the two mortgages on it), you would be correct.  Chapter 7 Trustee could have a field day.

Des.