Chapter 13 - an apartment vs. a house

[Vandervecken]

Good afternoon! Another member of this site referred me here, and I've been reading everything and learning!

I read the NOLO books, and I finally found a good bankruptcy attorney, but my appointment isn't for another week. I'd like to ask a couple of questions if I could, please... maybe help ease my nerves instead of sweating out through the holiday!

My situation is a divorce. I found my wife had been stealing from me; lying about her income, wildly spending money, racking up massive balances on joint credit cards, etc. Currently I'm renting a 2 bedroom apartment; my employer lets me work from home, provided I have a separate bedroom exclusive devoted to the work space. In addition I own some rental houses for side income. I know I'll be in a chapter 13 in order to save the rentals and some other personal property. My background is finance, so I've been able to work through a lot of the schedule I/J and know that I'll be in a 19% liquidation, 45% (or so) unsecured payback.

But I was thinking last night: I own rental houses, but I'm renting an apartment. My rental houses are in good neighborhoods. So... when the divorce is final, what if I converted one of the houses from rental use back to personal use, and make it my primary residence? The mortgage is higher than what the IRS allows for one person. Would the trustee object?

[justbroke]

Typically the Trustee would not object if you're actually in the home at the time of filing. But, alas, this is the perfect question for an attorney practicing in your District! I, in fact, did something very similar to what you are contemplating. I had 2 investment properties that I included in the bankruptcy. I was living in a rental home (no within 100 miles of the other two homes and those two homes were in different States). When I was 2 months into my Chapter 13, I realized that the one I wanted to keep was no longer viable -- couldn't find a renter as the market was crashing! -- and the other "expensive" home that I was going to surrender, I changed my mind! I was able to confirm my plan with the more expensive one that was over-the-market by a lot (by a lot I mean double). I moved into that home and filed an amended plan indicating that I would cure the arrears. This was even after the lender moved for relief from the automatic stay! They were denied and I was able to stay in the home and allow my plan to cure the arrears.

I'm not saying that's the best way to go about this, but you may be able to propose a "good faith" plan and use one of those rentals as your residence. Again, this is a great question to ask any would-be attorney!

[Vandervecken]

Thanks, justbroke! Finding a lawyer has been a challenge, lots of lawyers doing them, but most of them are new at it and all want a simple bankruptcy. Nobody seems to want to actually think out of the box.

[justbroke]

Thanks, justbroke! Finding a lawyer has been a challenge, lots of lawyers doing them, but most of them are new at it and all want a simple bankruptcy. Nobody seems to want to actually think out of the box.

I filed Pro Se because my Chapter 13 was complex (multiple investment properties, taxes, cram downs) and I think the cheapest attorney wanted $5,000. I believe that $5,000 would have been worth it for an attorney to take on the hours-and-hours-and-hours of work required for me to have my plan confirmed. This was before a "model" plan was a thing in the District so I was one of very few Pro Se individuals to get to confirmation in a Chapter 13.

Best wishes.