Calculating value of house.

[Ineedhelp2]

I'm in a situation where I have so much home equity that I could not do chapter 7 and chapter 13 would end up being 100% payback.

However, it is possible that if the house is valued according to the tax accessor, that it would possibly work out for a 50% payback in chapter 13.

How do they determine the value? Do they have it appraised? Do they factor in that in a quick sale, full vaule might not be realized?

[aa06a47]

They will have it appraised if they feel the figure you put down is a low ball figure. I used the tax appraisal value when I did mine, but that number was actually higher than what I feel I could get for the home. It wasn't a big deal in my case as the state exemption took care of most of that.

If you have a ton of equity, remember to subtract out your state exemption. That would be the min payback for a chapter 13. If you find that you would still be in a 100% payback, you need to consider if BK is right for you. Your chapter 13 plan would also have to show you can make that payment each month otherwise the judge will not approve it and you might be forced into a chapter 7 liquidation.

The reason that clause is there is they don't want people filing bankruptcy that have more assets than debt. Technically, your not "bankrupt".

[Ineedhelp2]

I have a very low exemption in my state.

At any rate, a house that is appraised at $300,000 might sell for $270,000 at an auction. It might sell for a lot less than that.

Do they reduce the value at all to allow for the fact that the appraised value might not be realized?

[SinkingFast]

Ask several Realtors to come and give you a Competitive Market Analysis of your home. Possibly 3. Act like you're gonna sell, and tell them you need to sell quick. Moving for a job or whatever. That will get you the lowest "reasonable" value possible.

Also, have the REA's list out how much to sell your house and deduct the costs to sell in addition to your State Exemption. Subtract out your mortgage, and that's roughly what the Trustee could expect to clear to distribute to your Creditors.

A Ch 13 has to pay the Creditors at least as much as they would get paid if you filed Ch 7. If you have excess equity in your home, it's quite possible the Trustee could agree to settle with you. Sometimes, Trustees will "split the difference" just to not have to go to the effort of siezing and selling assets. Houses are especially burdensome for Trustees. They don't always sell quickly, tying the Trustee up for months.

[Ineedhelp2]

I'm really close on this.

It looks like the market value of our house is $300,000.

I've got a first mortgage for $155,000 and a second for $55,000, so in theory I have $90,000 equity. But a 7% commission will reduce that to $70,000.

We have a $39,000 exemption for hour house which puts my surplus at $41,000.

I wonder if it could further be ruduced to allow for a quick sale. Even a 5% reduction in house value would bring the surplus down to about $25,000.

I owe about $55,000, so would it be possible I could get a 50% payback plan?

[Ineedhelp2]

I went to a different bk attorney today (who gave a free consulation as opposed to the other who charged $40).

He was more inclined towards chapter 7. Although I have lots of equity, he feels that the costs of selling the house plus the loss incurred by having a quick sale, would bring my equity close to the exemption level and I could discharge everything in a chapter 7. Even if it went chapter 13, it would be far less than a 100% payback as the other attorney seemed to think it would be. The more recent attorney said that the trustee for chapter 13 would likely take the tax assesor value of our house, or some compromise between that and the market value determined by a lender, and that would put us very close to a zero payback of unsecured debt.

[Jman30]

Well, that is good news for you!

It is amazing the different answers you can get from different attorney's. The law is so new that there is no standard of answers yet. I filed under the old law and I checked with three lawyers before choosing one and they all the same answers.....the law was settled. Now, you have this new law and each attorney has a different view.

It sounds like you found an attorney who has a better handle on your situation!!!

[JPOP1]

I'm glad I found this Thread. This is one of the things I'm currently trying to figure out.
Here is my scenario; I own a Home that I owe approximately 170,000 on. My tax value, which I just received in the mail, is also around 170,000. I had a CMA done by my realtor a month ago and she thought that I could get around 184,000 for it. But she stated that our area of N.C. is still real slow and that on average homes set on the market for 6 months. So I would say for a quick sale I would be looking at around a 170,000 which leaves me with no equity. EVEN IF it sold for 184K I still have a NC state exemption of 18,500for each debtor, each debtor means a total of 37K in exemption, right? So if this is accurate then I could claim the 2nd mortgage I have, that I owe 635.00 a month on at a balance of 48K, as unsecured debt. Does this sound right to you guys?? Man this would make me HAPPY!