% Payback (it doesn't matter)

[lomaxarts]

We own a very small house outright (800 sq feet that needs lots of TLC). The house is part of a homeowners association/club where we cannot have mortgages or home equity loans and the house is worth between $150-$200 (we are waiting for the appraisal). Because we have 100% equity and about $150k in unsecured debt, it was suggested by one lawyer that we go with chapter 13 to save the house. But since it will take 5 years, can we continue to fix the house? Or will we not be allowed to put any money into the house. If we went chapter 7, we don't know whether the trustee would let us stay in the house until it sells, and rent is very expensive around here. And we have a dog and a cat and it is hard to find places that will allow pets...I guess I am feeling really confused and shell struck. Any advice? which would be better, which would cost us more? Would it be better to file chapter 7 (we are both self-employed) and get it over with? 5 years sounds like debtor's prison.

[deannal]

percent payback

i had a 341 today and the trustee stated that i would be paying back 22% but when i go to ndc it states 100% payback. total debt 27,000 and i will be paying 285.00 a month for 5 years and that certainly is more than 22%. she also made a statement that because i filed a chapter 7 in 2005, that the other 78% would not be discharged. i know i can file a 7 again in 4 more years but i am confused as i know its more than 22% and why my attorney did not make me aware of this.

[CH33 Paralegal]

HHM
Rather than a "20" do you think a 13 would be better for us or would we just have to give any savings on the mortgage to unsecured debt? We are also behind on property taxes.

I'm sorry, but a CH20 is that of a lifestyle filer or a "stay junkie" you shouldn't want to do multiple chapters and on top of that add them up for a custom bankruptcy experience.

[justbroke]

ok, this is helping me understand a 13 a litle better...ok, my lawyer wants me in a 13, due to DMI, he says im looking at 300 per month for 3 years...

i know the trustee gets a cut and the lawyer, right?

so, do you think that the 300 is the bottom line with their cut, or is it possible to whittle it down further if i find more expenses to reduce the DMI?

and, in a 13, do you still have to give back luxury items the same as in a 7?..i guessing the trustee would think if you can afford a luxury item, you can pay more for your plan, right?

I have no clue how your lawyer came up with $300 a month, as he has all your financial data. Generally, you pay 10% to the Trustee for any "in-plan" payments that the Trustee makes. Also, your lawyer may charge some fees in the Plan as well, and these need to be paid over the duration of your case.

For 36 months, $300 turns out to be $10.800 over that period. I'm sure your lawyer is getting a little, and the Trustee would have earned about $1,080 (based on 10%, but usually less) for handling that $10K.

In a Chapter 13, you don't have to surrender luxury items, but if they don't have exemptions, you may have to pay their "value" to your unsecured creditors.

[floridian]

ok, this is helping me understand a 13 a litle better...ok, my lawyer wants me in a 13, due to DMI, he says im looking at 300 per month for 3 years...

i know the trustee gets a cut and the lawyer, right?

so, do you think that the 300 is the bottom line with their cut, or is it possible to whittle it down further if i find more expenses to reduce the DMI?

and, in a 13, do you still have to give back luxury items the same as in a 7?..i guessing the trustee would think if you can afford a luxury item, you can pay more for your plan, right?

[justbroke]

We included ours in the BK, it's a deeded timeshare (Shell Vacation Club)and the result is "collaterral to be surrendered". Interestingly enough, they offered to settled for $1200 just before we filed and we owed $8000+. Go figure

That's because no one wants a timeshare these days (well, at least not a Bank). Also, the maintenance fees are usually where the real money is lost.

[parsoc48]

We included ours in the BK, it's a deeded timeshare (Shell Vacation Club)and the result is "collaterral to be surrendered". Interestingly enough, they offered to settled for $1200 just before we filed and we owed $8000+. Go figure

[indebt00]

thank you so much for your help

I went and looked up our timeshare stuff...we have a deeded intererst in real estate....I am hoping we can reaffirm (or whatever the term is in ch 13) the loan on this and keep it. crossing fingers

[justbroke]

What does non-dischargeable mean?

Means that you will have to pay for it. Can't be "included" in the Bankruptcy.

The key for your State will be, is a timeshare deeded real-estate, or is it just an executory contract / luxury good or service?

is this how the state views it or does my paperwork tell me what it is?

It is how your State views it and/or how the paperwork reads. If the paperwork reads that you are purchasing "an interest in real estate", then it is likely treated as such. If you purchased just "usage" then it is not a real estate interest.

If it's an executory contract... just reject the contract. If it's a luxury good (unsecured debt), then it will just be discharged... if the Trustee abandons it.

which of these would help us keep it?

Neither. An executory contract, is just a contract that you may want to end, so you would reject it by motion. The Trustee may abandon it (not want anything to do with it) because Timeshares are notorious in Bankruptcy for being the hardest thing to sell. Generally the Trustee will probably try to make a deal with you so they don't have to deal with it.

would you mind helping me word the question I should ask my lawyer about this? this is one of the most important things I want to know about. thank you so much for your help

You just need to ask your attorney two things.

1. Is my interest in my timeshare a "real estate" interest?

2. (Regardless of the answer to #1) What is your recommendation to deal with the timeshare?

Hopefully, they'll guide you through the process.

[indebt00]

There was one State, I think it may have been Florida, in which a BK Judge found a timeshare to be a "luxury good" or "luxury purchase"... and not so much real property.

It ended up making the debt non-dischargeable because the person purchased an "upgrade" about a month before filing for Bankruptcy and it was over the $550 limit (at the time).what does non-dischargeable mean?

The key for your State will be, is a timeshare deeded real-estate, or is it just an executory contract / luxury good or service? is this how the state views it or does my paperwork tell me what it is?

If it's an executory contract... just reject the contract. If it's a luxury good (unsecured debt), then it will just be discharged... if the Trustee abandons it.which of these would help us keep it?

However, be careful of the Tee. They may still want you to pay them for part of the value. if we pay for the value do we get to keep it? Hopefully you'll have a great lawyer!

would you mind helping me word the question I should ask my lawyer about this? this is one of the most important things I want to know about. thank you so much for your help

[justbroke]

There was one State, I think it may have been Florida, in which a BK Judge found a timeshare to be a "luxury good" or "luxury purchase"... and not so much real property.

It ended up making the debt non-dischargeable because the person purchased an "upgrade" about a month before filing for Bankruptcy and it was over the $550 limit (at the time).

The key for your State will be, is a timeshare deeded real-estate, or is it just an executory contract / luxury good or service?

If it's an executory contract... just reject the contract. If it's a luxury good (unsecured debt), then it will just be discharged... if the Trustee abandons it.

However, be careful of the Tee. They may still want you to pay them for part of the value. Hopefully you'll have a great lawyer!

[indebt00]

I hope to find out more details for our state when we meet with the lawyer.
the timeshare was only 11k and we owe about 6k. so it wasn't a huge purchase. and there are 100's for sale of our timeshare at this time. I couldn't imagine trying to sell it...just too many for sale.
I believe its a deeded one....as I believe I have a deed for like 1/19th % of a unit...or something cooky like that.

we want to keep paying for it and keep it....protect the asset...but we will see if that is allowed.

[justbroke]

To make it even muddier, Trustee's find a terrible time trying to sell timeshares, so generally abandon them. This means that they want nothing to do with it. however, if you keep it, and as optimistic posts, you will have to pay at least that value to your unsecured creditors during your plan.

Probably best to just surrender the timeshare. Also, timeshares are treated differently amongst the States. It could be an actual deeded real estate or just an executory contract.

[optimistic1]

ok...after reading these posts and this one in particular....are you saying....

that if you have something with some equity/value/asset that the trustee doesn't take it and sell it and use the $$ towards your ch13....
it just increases the amount you pay back in the ch 13???? because i have been imagining the trustee making us sell something to get the money

ps...the exact reason I am asking this is because we have a timeshare that is about 50% paid off...not sure how equity works...all along we have thought they would make us SELL it and take the proceeds...and I keep thinking what a stinking hassle that would be. so....if I am understanding correctly...IF we have equity in this asset....we pay more back?

or I am completely off the grid thanks

Yes you correct, if you have a possession or asset, that would not be exempt in a Chapter 7 liquidation BK, and you choose a 13, then the value of that assett is then calculated into your plan. Because, under liquidation (Ch.7), you would have had to sell it, or pay the trustee what it is worth, so that he could pay the creditors.

Doing a 13 allows you to keep it, however, the creditors will still get paid what it is worth through your plan.

[indebt00]

Correct, there is no liquidation of assets in a chapter 13, (unless "you" want to give up the asset). For all-intents-and-purposes, the only asset of a chapter 13 is your NDI.

Liquidation value is the value of "non-exempt" assets/equity.

Lets say you own a car that is worth $15,000, you only owe $5000, and your state only gives you a $5000 exemption. Thus, there is $5,000 of non-exempt equity (Value - liens - exemption amount = non-exempt equity). Thus, in the chapter 13 context, you would "minimally" need to pay $5000 over the course of 60 months (or surrender the car).

ok...after reading these posts and this one in particular....are you saying....

that if you have something with some equity/value/asset that the trustee doesn't take it and sell it and use the $$ towards your ch13....
it just increases the amount you pay back in the ch 13???? because i have been imagining the trustee making us sell something to get the money

ps...the exact reason I am asking this is because we have a timeshare that is about 50% paid off...not sure how equity works...all along we have thought they would make us SELL it and take the proceeds...and I keep thinking what a stinking hassle that would be. so....if I am understanding correctly...IF we have equity in this asset....we pay more back?

or I am completely off the grid thanks