I have a question

[ClassySeattle]

Im being foreclosed on and I dont want to lose my property, will the judge let me keep it in a 13? The property has equity. Ive tried to get a loan but keep getting rejected. Im making steady income now and can show it. I was told that I would have to give up my property. (The property is commercial retail) is this true?? Please advise.

Thanks in advance!

[SinkingFast]

By commercial/retail, I have to ask,.............. Are you living in the property as your primary residence??

BK Filers are generally allowed some $$$ amount for Homestead Exemption to protect their primary residence. If this isn't your primary residence, you may have to cover the property with a "Tools of the Trade" or WildCard Exemption.

[HHM]

How is the property titled, do you own it individually, is it owned through any type of corporate entity?

What is the balance of the loan on the property?

[ClassySeattle]

Reply

I owe 100k on the property. I dont live on the property. Titled to me and my Mom.

Whats the tool of the trade and wild card mean?

I have 10 years left on my property mortgage.

[SinkingFast]

Debtor/Filers are allowed to keep a certain amount of property and assets to start their new financial life post BK. You protect the property you can keep with Exemptions.

Exemptions vary from State to State. There's even a set of Federal Exemptions. Some States allow BK Filers to choose whether they will use State or Federal Exemptions.

There's a variety of Exemptions. Homestead to protect your home. Personal Property to protect your household goods, furnishings, clothes, and such. Vehicle to protect your car.

"Tools of the Trade" is an Exemption to protect things you use to earn a living. If you were a mechanic, or a carpenter, you'd use it to protect your hand tools, perhaps. If you telecommuted via computer, you'd use it to protect an extra computer. That sort of thing.

WildCards can be used to protect anything you want. Some people have more equity in cars than their vehicle Exemption will cover. They'll use their WildCard, if they have one, to protect excess vehicle equity. You know you're gonna get back a significant income tax refund, you could use your WildCard to Exempt that.

[HHM]

In any event, if your goal is to keep the property , there is no way you could file Chapter 7 (unless your equity is very low, "probably not"), there is no way to exempt it. Aside, tools of the trade refers to "personal property", not real property.

In a chapter 13, you should be able to hang onto the property, provided, you can afford the payments. One of the key factors in a Chapter 13 is that your creditors must get at least as much as they would get if you had filed Chapter 7 and non-exempt assets were liquidated and paid to creditors. Thus, you would need to be able to fund a chapter 13 payment plan up to the amount of equity you have in this property (minus any wild card exemption). For example, if you have $50,000 in equity (and you debt exceeds $50,000), you would have to at least fund your Chapter 13 payment plan to the tune of $50,000 over 60 months.

[ClassySeattle]

What if my debt is only $30,000

[ClassySeattle]

My equity in the property is approx 100k, my debt is $30k am I able to do a 13?

[HHM]

Yes, you could do a chapter 13, but you would have to pay off ALL $30,000 of your debt. So, if you were to file today, you would have a chapter 13 payment around $575 per month (note, it's not $500 because of the Trustee's fee, 10%, and your likely attorney's fees).

Next question is, why is the property in foreclosure in the first place?

You may want to read this thread first about whether to file or not. http://www.bankruptcyforum.com/showthread.php?t=11328

However, because you are facing foreclosure, unless you can do a foreclosure workout plan with whatever creditor is trying to foreclose, your only option is to file Chapter 13 BK.

Before we forget, the other major qualification for filing Chapter 13 is that you have a steady stream of income to which to fund the chapter 13 payment plan.

Another thing to consider, the nice thing about Chapter 13's is that you can voluntarily dismiss a chapter 13 anytime before confirmation. So, you could file chapter 13 to put off the foreclosure process and see if you can motivate the foreclosing creditor to some type of settlement and then simply dismiss your case.

[ClassySeattle]

What if I only have 2 years tax returns, will that be ok?

[HHM]

What if I only have 2 years tax returns, will that be ok?

It should be ok, if two years is all you have, it will have to due...but how do you come to own a piece of commerical real estate, yet only have 2 years worth to tax returns?

[ClassySeattle]

I went overseas to take care of family matters that is why I only have 2 yrs tt. I have owned this property for many years, its just the past 5 years my income has been bad.