Selling a home that is not part of the chapter 13 payment plan

[minisport]

we are currenlty in our 4th year of a 5 year california chapter 13 payment plan. all has been going well. we have a rental property in california that was claimed as an expense when we originally filed out chapter 13, but it was not included in the payment plan. we pay it as normal outside of the plan and have had no issues. our tenants have experienced medical issues and can no longer afford to live in the house. we also just received notice that the mortgage payment is going to go up by about $800 in june, which we can not afford. therefore, our only option is to sell the house. since the house was not actually part of our chapter 13 plan, can we do this on our own, or do we need to notify our attorney and trustee???

[dmc-2008]

I think you need to call atty because your assets have changed, or will change and you may or may not make money which if you do, I think becomes the trustees! I hope i am wrong!

[minisport]

even if its not part of our plan? we opted to pay for it outside of the plan, which was ok'd by the court at the time of our confirmation. i've read that paperwork may need to be filed and that trustee can use any monies made to pay off our plan and possibly dismiss it early, but it was my understanding that we got whatever money was left over.

[dmc-2008]

Hmmmm I dont know but yeah, maybe use it to pay off early! That would be great. I just dont think you can keep that added income without affecting your bk someway! Maybe in a positive way!

[dmc-2008]

You didnt say that! :-)

[sophieanne]

Hi..I think one of the moderators needs to respond. My house payment is paid outside the plan, but the home is still part of the chapter 13 assets.
You will need to talk to your attorney.

[justbroke]

our only option is to sell the house. since the house was not actually part of our chapter 13 plan, can we do this on our own, or do we need to notify our attorney and trustee???

You may not dispose of any asset or (more generally) incur any debt during the commitment period of your Chapter 13. This simply means that you must have Court Approval to sell or acquire property.

I trust that you used an attorney and that the attorney included the existing equity (at the time of filing) in your Chapter 7 liquidation test. Once you have your liquidation value, you just make sure that the unsecured creditors receive at least as much as they would have if you liquidated in a Chapter 7.

There are different ruling on whether proceeds from the sale of "vested" property, in the bankruptcy estate, are estate property. There may be a question if the Chapter 13 Plan vested property back to the debtor upon confirmation of the plan and hence the proceeds not property of the bankruptcy estate. You really need an attorney to look at the caselaw in your District/Appellate Circuit, review your Confirmed Plan, and determine whether the proceeds are property of the bankruptcy estate.

Everything that was mentioned in this thread is possible. The (net) proceeds may be property of the estate and would be distributed to the unsecured creditors to payoff the plan early. The (net) proceeds may not be property of the estate and not subject to distribution. Unfortunately, I can't answer this for you. You need your attorney to review your case, plan, and what is the process in your District.

Regardless, having your plan paid off early would be nice... wouldn't it?