Advice Needed, Please help!

[scme1973]

Hello everyone! I'm hoping that someone can assist me, because I am totally confused and I don't want to make the wrong move.

My spouse and I are looking at filing Chapter 7 bankruptcy in Arizona. We have consulted with two attorneys and are hoping to consult with a third. The problem is that we have recieved conflicting advice between the two attorneys and just don't know what to do.

Our income is under the Chapter 7 limits, and our home, cars, furnishings etc., all come within the exemptions. We purchased our house at $392,000, but the estimated values we are getting back is between 350,000-375,000. This would be a really decision if we didn't have one sticking point.

We also own one duplex. It was in my family, has sentimental value, and I feel strongly that we should keep it. The duplex does not add any income--by the time we pay the mortgage, utilities, and maintenence, we break even or come out a little behind. We have a mortgage on that property for $162,000 and the estimated values I'm seeing are between $139,500 to $160,000.

So we're underwater on both properties. Here's where the conflicting advice comes in--about how to protect the duplex. Both attorneys have told us to file for Chapter 7, but one attorney is telling us that we should sell the duplex back to my parents at fair market value. The other attorney is telling us that since the duplex is underwater, no trustee will want to take on the burden of selling it since they won't make a profit, and he will probably allow us to reaffirm the debt.

Who the heck should I believe? Please help!!!

[JRScott]

Since the duplex has no equity I can't see a trustee taking the time and expense to sell it and have nothing left for creditors.

However he may well object to using the expenses in a chapter 7 and to keep it in a chapter 13 you'd have to be able to pay 100% back to creditors.

See the third lawyer and see what he says .

[lrprn]

Here's where the conflicting advice comes in--about how to protect the duplex. Both attorneys have told us to file for Chapter 7, but one attorney is telling us that we should sell the duplex back to my parents at fair market value. The other attorney is telling us that since the duplex is underwater, no trustee will want to take on the burden of selling it since they won't make a profit, and he will probably allow us to reaffirm the debt. Who the heck should I believe? Please help!!!

Although it seems strange, both lawyers are right.

Bankruptcy law is often not black and white - it's a matter of interpretation. How any one Ch 7 trustee reacts to a situation like your duplex often differs depending on the customs of your local bk court, how aggressive the trustee is, and how these kinds of extra assets are typically handled by the trustees in your court.

In the situation you describe, the trustee you are assigned could decide to go either direction depending on the overall financial picture of your case.

Talk to several more bk lawyers in your area, and ask each one why he/she thinks the way they do about the duplex and to give you an example of earlier cases where the trustee decision went the way they are recommending.