Chapter 7 Discharge, but convert to 13?

[slickwilly95991]

I filed for chapter 7 and everything went well until the trustee indicated he wanted to claim my house. I stated I had $1k in equity that I exempted. He says he sent his appraiser to my house and that I have $15k in equity. So I either give up the house, give the trustee $15k, or convert to a 13.

I tried finding an appraiser but no one says it is worth what the county assessor or my refinancing appraiser two years ago says it is worth.

I don't want to hand over $15k from my retirement and I want to keep the house. Is my only option converting to a 13? And if so, does the discharge I receive carry over meaning I have no unsecured creditors in 13? And if I am up to date on my house payments, what kind of repayment would I need to make?

[rrockinggramma]

If you convert, then all of your unsecured creditors would be able to file a claim in the chapter 13. Not many of them do file claims, but if they did you would pay them a percentage determined by your disposable income and your attorney and approved by the court. You would make those payments to the trustee until you are discharged. I think with the new law it is 60 months?? but not sure. Mine is 36 (old law) Anyways, if you convert, you will not receive a chapter 7 discharge first but would receive a chapter 13 discharge once your plan is completed. If you chose to pay the trustee 15,000 it could keep your chapter 7 open for a long long long long time, even if you receive your discharge. (discharge and closed are 2 separate items in a chapter 7 BK)

[slickwilly95991]

Sorry, I wasn't clear previously. I already received a discharge in chapter 7. Just the issue with the house is clinging over my head. Would the chapter 7 discharge I already received disappear if I convert to the 13?

[HHM]

Is the trustee's appraiser correct? And just how much equity exemption does your state allow.

You have a couple options....find an appraiser that will back-up your valuation and fight with the trustee in court. Basically, it will be your appraiser against his. Both appraisers will have to testify in court. This may be the way you want to go because the trustee still needs to factor in cost of sale, so even if you can't find an appraiser that will value your home at or less than the equity exemption, if you get close, you can make it so it is not worth it for the trustee to pursue. At the very least, get a couple of appraisals, if you can at least show the trustee that there is a valid dispute, you can use that to negotiate with the trustee, thus, instead of the trustee asking for $15,000, maybe you can get him/her to $7,000 (or some lower amount that you can make payments on...that would probably be better than going to a chapter 13).

Otherwise, you can reopen your case and convert to a chapter 13.

Also, don't worry about your case "closing". The fact that you have an open BK does not affect you in any way so long as you have a discharge, so even if you enter into a payment plan with the Chapter 7 trustee, and your case stays open for a couple of years, that has NO affect on what you can do in the future. The date of discharge is what matters, closing is merely administrative.