Assets and Chapter 7

[HHM]

I am closing this thread. Too many questions are getting lost. For new members, you can post new topics in the forum.

[Backlyn]

Oh believe me I know what you mean. Hindsight is certainly 20/20 with all of this and it seems no two cases are the same. We have one vehicle with a loan against it, supposedly that is ok. Our home has a fairly high mortgage so apparently that is not an issue but I have the title to this SUV and a motorcycle. We really don't care about anything but our home and basic vehicles. I don't think the attorney saw this coming on the assets with us. We are "slightly" over. I am praying for a decent tax return now to see if it will help us buy the SUV. Lawyer said often these things are settled for pennies on the dollar but how many pennies are we talking. We have our hearing in three weeks. It will be a long three weeks. Not like we can go and take out a car loan or even afford the payments for a new car at this point. Had I had a clue this was going to be an issue I would have borrowed against the vehicle. Live and learn the hard way!

[pcn]

We had a minivan, paid it off with home equity loan

[Backlyn]

Yes the SUV is paid off. Just wondering now what they will want us to pay for it.

[PJP]

We were supposed to be discharged this week but trustee filed an objection to our assets. Try to follow this one. We had a minivan, paid it off with home equity loan, later used van to aquire SUV for better gas mileage and have the title to SUV now as a result. The SUV is non-exempt and I am scared to death to see what the trustee will ask us to pay for it. Book value is around $9K. We are praying to get tax refund to be able to buy the vehicle back or I have no way to get to my job.

Lynne

Sorry to hear that. Hope things work out. It looks like PA doesn't have any automobile exemption. Is the SUV paid off?

[Backlyn]

We were supposed to be discharged this week but trustee filed an objection to our assets. Try to follow this one. We had a minivan, paid it off with home equity loan, later used van to aquire SUV for better gas mileage and have the title to SUV now as a result. The SUV is non-exempt and I am scared to death to see what the trustee will ask us to pay for it. Book value is around $9K. We are praying to get tax refund to be able to buy the vehicle back or I have no way to get to my job.

Lynne

[pcn]

I wish I knew about the extra equity part. We are slightly underwater from our most recent appraisal, so it didnt come up. From what HHM posted earlier, I may not be correct regarding the buy it back option as it relates to a home. But, from the discussions with several atty's here (when we had appraisals showing equity) that was the distinct impression I received. Hopefully he will claify, I would opt for his knowledge over my memory

[PJP]

Correct, some states actually have quite high homestead exemptions (MN has 300k, Fl and TX have 125k for example). I think OR has 30k. AL has only 5k. It's usually doubled if a person is married. If you don't have enough exemption there is the possibility to "buy it back" as an option. I think the idea that "you lose everything" in a ch7 is a common misconception.

Wow those are some high homestead exemptions! With that amount, I see many people keeping their house in those states after Ch. 7.

So I have a question. If your homestead exemption in your state is, lets say 30K, and the equity in your home is 40K in a 100K house when you file ch. 7, does the bk truestee then sell your house and give you 30K in cash? And when does the buy it back option trigger?

[HHM]

I am in CT and exemption is $75K. My son is co-signer on my mortgage and is on the deed. I am not clear if the equity in house would be half his. I want to keep house.

It depends on how your state interprets its homestead exemption. However, homestead exemptions typically attach "per house" not per person. So, if you have 1 house with 2 owners, the exemption is the same. In essence you split the exemption, not the equity.

For example
Home is worth $300,000
Total Mortgages, $200,000
State Exemption, $60,000
2, non-married, owners.
Non-exempt equity $40,000

Regardless of how many owners, there is still $40,000 of non-exempt equity. Each owner only has $30,000 worth of exemption.

Again, this depends on the state, some states (maybe) give a homestead per person, but most states, the exemption is on the property.

[alironz]

It depends on your state's exemptions. If your state has a $150K exemption for home equity, you are fine, if there is significant non-exempt equity, the trustee will take and sell the house.

I am in CT and exemption is $75K. My son is co-signer on my mortgage and is on the deed. I am not clear if the equity in house would be half his. I want to keep house.

[pcn]

Correct, some states actually have quite high homestead exemptions (MN has 300k, Fl and TX have 125k for example). I think OR has 30k. AL has only 5k. It's usually doubled if a person is married. If you don't have enough exemption there is the possibility to "buy it back" as an option. I think the idea that "you lose everything" in a ch7 is a common misconception.

[PJP]

You can file ch7 and keep your house.

To the OP, search on "2nd mortgage settlement" or "chapter 7 lien strip" or similar to find more alternatives to ch13. Study them all before choosing, of course.

But only to the exemption amount for the real property permitted in that state. Usually the amount is low. If you have substantial equity built (more than the exemption amt) in the house, I don't see how ch 7 can let you keep it.

[pcn]

Chapter 7 will discharge all your debt, including the second mortgage. You would want to file Ch. 13 if you want to keep your house.

You can file ch7 and keep your house.

To the OP, search on "2nd mortgage settlement" or "chapter 7 lien strip" or similar to find more alternatives to ch13. Study them all before choosing, of course.

[PJP]

Do they come out to your house to see what you have for assets? If so, will my neighbors know I'm filing bankruptcy?

I qualify for chapter 7, but want to strip the 2nd mortgage from my house, so heard I have to do a 13 for that.

Chapter 7 will discharge all your debt, including the second mortgage. You would want to file Ch. 13 if you want to keep your house.

It's unlikely that someone will come out to your house unless the court finds a reason to do so (e.g. when an evidence suggests you have some valuable assets to pay the unsecured creditors.). Truestee gets some commission from the proceeds of your assets and paying back your creditors so he/she may want to do that.

[PJP]

I am hoping to file chapter 7 n March. My question is I own my car and have about 150k equity in the house. I want to keep paying the mortgage and kep the car but need to know if that is a possibility.

Chapter 7 will liquidate your assets beyond that exemption amount. I don't know in which state you live but it seems like 150K will be well beyond the exemption. In my state I think it was 30K for real estate property. If you want to keep your house and car, you need to file Chapter 13, which will allow you to keep everything but will work out a payment schedule over 3-5 years.