Question For Mtg People

[DeadManCrawling]

Here's the situation.

We are going to file CH 13 in the next few months.

After we are dishcarged, but well before closed, we intend to sell our home and purchase a condo, which will be easily within our means to afford and maintain.

We would like to sell our place and get a condo within 6 months or so after our plan is confirmed, if possible.

Our current equity after all fees to realtors, etc. is around 100k. That would be the amount we have as a downpayment, and we really want to keep it small.

We have found suitable condos in the 120-140k range.

We will not have enough cash on hand to "bridge the gap."

Is it possible to get a small mortgage in the 30-40 k range, fresh out of BK with that much to put down? What are other concerns? Interest rates?

Currently our mortgage total, including escrow is $3,800 a month. We can afford this for as long as we must, but the thought of paying on this gigantic house versus a few hundred bucks-it just makes sense to move to the smaller more affordable place.

Thanks for your input

DMC

[jal1129]

I don't know about mortgages but just wanted to let you know that the chapter 13 debt is not discharged until all of your plan payments have been made. And in order for you to sell your house and buy a condo during your bk (you said 6 months after filing) you will have to get the trustee permission.

[emoney]

You need the advice of an attorney now! I believe that the trustee may want your home equity for your creditors. I depends which state you in which you live.
regards,
emoney

[DeadManCrawling]

You need the advice of an attorney now! I believe that the trustee may want your home equity for your creditors. I depends which state you in which you live.
regards,
emoney

We live in Florida, where all equity is exempt, up to any dollar amount. and have homesteaded our home since 2001, well within the window necessary.

I am aware that the BK in a 13 goes 5 years. We would like to move during that time, and attorney says it won't be an issue.

Just curious if there are mortgages for such little amounts, and what they entail for someone in CH 13.

Attorney says the trustees here have never, in 19 years of the attorney doing BK exclusively, followed up on a debtor after the plan was filed, as long as plan payments arrive as scheduled. Many of his current and former clients have subsequently moved without a problem, without permission from a trustee. As long as the money shows up each month, they are satisfied.

thanks

[SinkingFast]

Attorney says the trustees here have never, in 19 years of the attorney doing BK exclusively, followed up on a debtor after the plan was filed, as long as plan payments arrive as scheduled. Many of his current and former clients have subsequently moved without a problem, without permission from a trustee. As long as the money shows up each month, they are satisfied.

thanks

Technically, you cannot sell your house during Ch 13 BK without the expressed permission of the Trustee.

The house will be an asset of the Ch 13 BK Estate. As such, the Trustee is in control of the house. The Trustee controls your entire Estate during BK.

While your attny's other clients may have moved, perhaps they weren't selling their homes to do so??!!

[DeadManCrawling]

Technically, you cannot sell your house during Ch 13 BK without the expressed permission of the Trustee.

The house will be an asset of the Ch 13 BK Estate. As such, the Trustee is in control of the house. The Trustee controls your entire Estate during BK.

While your attny's other clients may have moved, perhaps they weren't selling their homes to do so??!!

Actually, they did sell homes and move. Attorney called our local trustee and asked. Trustee answered by saying "As long as the mortgage is outside the bk payment plan, they don't care if/when we move or where to, including selling the house, as LONG AS they receive the scheduled plan payments."


So, I am searching for options to bridge this gap between about 100k equity and 120-140 price of condo. Our total expenses would drop by about 3k per month, so it seems to make good sense, and with our equity exempt, seems like an excellent financial move.

[lrprn]

So, I am searching for options to bridge this gap between about 100k equity and 120-140 price of condo.

If you can find a lender while you are in Ch 13 (can be difficult to do), the gap loan is likely to be at a very high percentage rate - 15-18%. How will having a loan with an APR that high work with your sell calculations?

[brokeinmichigan]

If your expenses will drop by 3K/mo, why not just sell your home now, and maybe avoid BK alltogether? That is, if having 3K/mo available will allow you to pay your creditors....

Just a thought....I tell ya, if we could've avoided BK by selling our hose we definitely would have!

Hoping for brighter skies ahead....

[DeadManCrawling]

If your expenses will drop by 3K/mo, why not just sell your home now, and maybe avoid BK alltogether? That is, if having 3K/mo available will allow you to pay your creditors....

Just a thought....I tell ya, if we could've avoided BK by selling our hose we definitely would have!

Hoping for brighter skies ahead....

Valid question.

If we sell now, we COULD pay off all creditors and avoid BK completely.

We would be left with ZERO money to buy a new place, but everyone would be paid.

Since Florida gives only one decent exemption-our equity-we decided to preserve this through bk.

Also, the house has actually been on the market for months now. No interest whatsoever, and it is definitely priced right and in a very desirable neighborhood. We have it priced at $138/sq foot. Every other home this size in this neighborhood (equivalents) are priced at 155 and higher per sq ft. Ours is 100k lower than most similar homes, and ours has been remodelled to a degree that should make it sell fast.

The reality of the housing market is very harsh here. Taxes on this house now exceed 10k per year. Insurance is 8k per year. The average house takes 18-24 months to sell now, in our area. We have virtually zero chance of seeing it sell fast enough to use the equity to pay creditors-even if we wanted to.

My wife is a seasoned real estate agent who has put serious effort into marketing and advertising our place, with no luck.

My credit score is, at last check, 467 so theres no real hope of anything but bk, after which we can rebuild.

Also, why on earth would we convert an exempt asset (our equity) to pay creditors. Florida, at least lets us keep our equity. Our other exemptions are 1k personal property. 1k automobile.