Is there any way to save our property?!

[Erinem]

Hi, my name's Erin, I'm a 21 yr old college student, and my parents are in the process of filing bankruptcy. They told me when they started filing this fall, but they just recently explained the details of our situation to me. I'm concerned that they're so saddened and ashamed by this whole thing that they've given up, so I'm doing a little research on their behalf.

Basically, our biggest issue is that, in addition to our house in FL, we own a "cabin" in North Carolina. It's basically a run-down shack, but it has tremendous sentimental value to my family. It's been in my Dad's family for years, my brother, sister and I have spent 1 or 2 weeks there every summer, and both of my grandmothers' ashes are scattered there. From what the lawyers have told my parents, they can either file chapter 13 and keep the property or file chapter 7 and lose it. The payments for chapter 13 would be HUGE. We might be able to do it with a lot of scrimping, but my understanding is that if we miss a payment, it gets converted to chapter 7, we lose the cabin, and the trustee keeps all the money we had already paid.

So, I'm wondering if there's any way to keep the property in NC. I've read about filing chapter 7 to eliminate unsecured debts and then immediately filing a 13 to protect your property, while somehow refinancing your house to help make the chapter 13 payments?? Is this or any other method a possibility for keeping our cabin? Is there a way to surrender it and then buy it back at auction somehow? I hate the idea of losing it, but what's even worse is how heartbroken my parents are. If anyone has any suggetions, they'd be greatly appreciated.

[SinkingFast]

It isn't necessarily a given that a Filer will loose anything filing Ch 7. You may just have to be prepared to pay some money to keep property you want.

Here's a link to Florida BK Exemptions,............ Property/Assets you can protect and keep in BK:

http://www.totalbankruptcy.com/state...ns_florida.htm

It is technically correct that you cannot protect the Vacation place with the Homestead Exemption.

Florida doesn't allow for much of a personal property or vehicle Exemption. $1K each. That may be per Debtor and possibly doubled if both Mom and Dad file. Chances are, any attny they choose to use would apply those exemptions to Household goods and cars they may own.

That leaves the Vacation property unprotected.

BUT,............. Your folks could still file a Ch 7 if they are prepared to pay the Trustee for the Vacation property themselves, directly.

The Trustee would have to pay Creditors what he/she would get if they liquidate the property. And Trustees have costs to sell just like regular folks. There's Real Estate Agent commission and all associated closing costs. The fact the property is in another State makes it less appealing as well. If the condition is not great and the property location not the best, it could take a long time to sell. The Trustee will consider all the facts available and possibly offer to "settle" on a reduced $$$ amount.

There's a couple ways your folks could pay the Trustee for the Vacation property. In 12 to possibly 18 monthly installments. Or your folks could get a 722 Redemption Loan on the property to pay the Trustee in full.

To get a 722 Redemption Loan, the attny will have to arrange it. The attny will also have to assert the payments do not create an undue hardship on your folks. And the Trustee will have to agree.

There are alternatives.

The one thing your folks definitely do not want to do is sign over the property to a family member in an attempt to hide it's existence. Or sell the property to a family member at a reduced price. That would be a transfer of an asset to an Insider and the Court will just go after the property and the other family members.

If your folks have only had a Consult with 1 attny, I'd strongly recommend you get them to Consult with 2-3 more BK attnys. Get different perspectives. See which one they'd be most comfortable working with.

[spell]

At its core, Chapter 7 means, you surrender everything you own, and they discharge all of their debt.

In practice, it's hardly ever actually like that, but the concept is the same.
Each state provides exemptions, or umbrellas you can use to protect a small amount of stuff. These amounts vary state to state and the attorney can guide you through the specifics. But a paid in full vacation property is almost always worth enough that they trustee will take it.

Also, items with loans out against them are easy to protect because you only need to protect the equity portion.

[FilingOnMyOwn]

Realistically, this is the most likely scenario:

The property will raise the trustee's eyebrow, and he/she will take interest in it.

If its a run down shack like you say, noone will be interested in purchasing the property other than for its land value.

So your family would have to be prepared to somehow pay the land value of the property in order to keep it.

[Erinem]

Unfortunately, my parents already paid a $3,300 "non-refundable" fee to the current attny, apparently someone who was highly recommended by a friend of the family. So far, though, he's been a jerk...and I get the impression he's not doing everything possible to help my parents.

[SinkingFast]

He might be a perfectly fine BK attny who just doesn't have the best bedside manner. He could be working to help your folks minimize their losses.

Many BK attnys just don't discuss much, if anything, with clients. Sometimes, it's even hard to get them to answer the most direct questions.

And, Boy, Oh Boy,............ You better not show you know much about BK to some attnys. It's like you stepped into their secret sanctum. You know things you shouldn't.

So just because he's not communicative doesn't mean he's not a qualified attny.