Divorce and selling house

[skyoumans]

I'm in chapter 13 and husband is not. What would happen if we divorce? I know my chapter 13 would be converted to chapter 7 but would they take the proceeds from the house? And what about my car payment that is included? Also, I know we still owe arrears on the house.

[justbroke]

It wouldn't necessarily be converted to a Chapter 7 unless you can no longer afford the Chapter 13.

As for conversions, the value of the home would have been that as of when you filed the Chapter 13. This is unique to conversions in that a conversion from Chapter 13 to Chapter 7 only gives the Chapter 7 what you had at the time of filing. So even if you gained $100K in equity, it's not available in the Chapter 7 conversion. However, if you dismiss the Chapter 13 and refile as a Chapter 7, then the equity calculation would be as of that filing date (the new Chapter y).

If you still have arrears, that can be problematic in a converted Chapter 7. I was able to convince my lender to give me a modification to bring me current (no more arrears).

If you have a car payment, that could also be problematic if there are arrears or there was a cramdown of the interest rate and/or the total loan balance.

[skyoumans]

Thanks justbroke!