Chapter 13 Asset question

[cz3ch]

I just converted to a Chapter 13 and have some questions.

My wife and I are going through a divorce (filed and pending) and my new lawyers say that her vehicle which is financed and has 10k of equity in it may be treated as community property. As well a car of hers that I'm driving (and paying the note on) which has < 2k of equity is now community property because I've been paying the note.

From my understanding of a Chapter 13 the trustee does not take the property but if there is equity that is community that I'd be liable for 50% of it and would have to repay it into my plan.

As mentioned our divorce is pending and the decree lists the cars to her but I doubt that the divorce will be finalized by the 341 C13 meeting.

Can someone help to explain how assets like these would be handled by a C13 trustee?

I've gone over other things such as her house which she owns outright prior to marriage and I have not commingled funds to make it community property. But I'm truly concerned as to what the trustee can do with these two vehicles.

I'm starting to freak out a little bit that she might lose both cars. Could really use some feedback.

Thanks in advance

[LadyInTheRed]

You keep your assets in a Chap 13 as long as during your plan your unsecured creditors receive as much as they would if you filed Chap 7 and your non exempt assets were liquidated. So, if you have $5,000 in non exempt equity in a car, your unsecured creditors must receive at least $5,000 during your Chap 13.

[cz3ch]

Thanks for chiming in LITR. My main concerns were the vehicles and the equity in them. I've calculated what my non-exempt equity might be and I have enough DMI to cover it for 60 months (I'll be on a 100% plan).

My big concern was that of my wife's house. She owned it 5 years prior to marriage, I've not paid into it in any way, and from what the lawyers have said it should be considered separate property. The "what if" I have is if the Chapter 13 trustee looks at her house and for some reason declares it community property. I'd have no way to exempt the community property (50%) share. Plus my plan would not afford the community property equity in the house. Would the trustee deny my plan and dismiss or would he force a sale of the house and my 50% be applied to my creditors? Again it's considered separate property but I'm trying to get informed in case the worse case scenario happens.

Thanks in advance!

[LadyInTheRed]

Thanks for chiming in LITR. My main concerns were the vehicles and the equity in them. I've calculated what my non-exempt equity might be and I have enough DMI to cover it for 60 months (I'll be on a 100% plan).

My big concern was that of my wife's house. She owned it 5 years prior to marriage, I've not paid into it in any way, and from what the lawyers have said it should be considered separate property. The "what if" I have is if the Chapter 13 trustee looks at her house and for some reason declares it community property. I'd have no way to exempt the community property (50%) share. Plus my plan would not afford the community property equity in the house. Would the trustee deny my plan and dismiss or would he force a sale of the house and my 50% be applied to my creditors? Again it's considered separate property but I'm trying to get informed in case the worse case scenario happens.

Thanks in advance!

The Chapter 13 trustee does not have the power to declare that an asset is community property. He could ask for evidence that it is separate property and/or object to the charachterization of it as separate property. But, I don't see why he would do that when your wife owned the house before you were married.

The trustee also does not have the power to deny your plan or dismiss your case. He can object to your plan and file a motion to dismiss your case. If he does that and your attorney can't work things out with the trustee, there would be a hearing and the judge would make the decision.

I really think you need to stop worrying so much. I am all for being prepared for the worst. But, you are dreaming up worse case scenarios with no reason to believe they will happen. Let your attorney handle your case and deal with issues as they arise.

[cz3ch]

You're right, I'm really taking this overboard by worrying about things that probably won't happen. I'll put my trust in the attorneys and just take it one day at a time. Thanks for slapping me back to reality, hopefully I won't need another

If he did file a motion to object and dismiss the case, what would happen then? Would I be stuck at square one and forced to refile or could they possibly throw me back to a c7 (nightmare)?