Newbie question re: Chapter 13

[Skipper]

Another family member and I jointly own a small undeveloped lot in the rural part of the state. I understand that in a Chapter 13 proceeding, that I would be required to make "equivalent value" payments in order to not be forced to sell the land.

I don't feel there is much "equivalent value" left, as there is over 100 undeveloped lots for sale in the area, and I think only three or four have sold all year (in the range of 30k-40k). A real estate agent from the are said that if it were auctioned of in a Trustee sale, that the value would most likely be nowhere near the few "retail" sale prices that have occurred this year.

My question is this; how is the "equivalent value" of land determined by the court? It would not seem reasonable that normal "comps" would be used, without considering the impact on the pricing in a bankruptcy auction scenario.

One other thought; once the "equivalent value" has been determined for "non-exempt" property, can that amount be given to the Trustee in a "one-time payment"? I am under the "means test" and have a negative disposable income number. My family does not want to put at risk their ownership/equity, and may be willing to make a payment on my behalf.

I would appreciate any thoughts you all may have!

Have a good weekend,

Skipper

[Skipper]

Equivalent value payment question

Hi all,

Trying to get an opinion..

I understand that in order to keep "non-exempt" property (like my wife's wedding ring... potentially slightly over the exemption), that the "equivalent value" must be paid.

My question is this; can the payment be a one-time payment in Chapter 13 (possibly family will help) in order to satisfy the exemption? We need Chapter 13 because of our home...

Thanks,

Skipper

[lrprn]

Another family member and I jointly own a small undeveloped lot in the rural part of the state. I understand that in a Chapter 13 proceeding, that I would be required to make "equivalent value" payments in order to not be forced to sell the land.

Not necessarily. It depends on the true current market value of the lot and how much your state's bankruptcy exemptions can protect.

My question is this; how is the "equivalent value" of land determined by the court? It would not seem reasonable that normal "comps" would be used, without considering the impact on the pricing in a bankruptcy auction scenario.

The best scenario is for you to get a certified appraisal yourself. It will cost a few hundred dollars, but is worth it. If you don't provide an appraisal, then the trustee will hire someone to appraise it, and my guess is that the appraisal won't be on the low side.

One other thought; once the "equivalent value" has been determined for "non-exempt" property, can that amount be given to the Trustee in a "one-time payment"? I am under the "means test" and have a negative disposable income number. My family does not want to put at risk their ownership/equity, and may be willing to make a payment on my behalf.

If it does turn out that the property has more equity than your state's bk exemptions can protect, then you have several options:

1. Sell your share of the land for the current market value to a family member well before you file. This can be tricky since you are selling to an insider, so talk over how to do this and when with an experienced bk lawyer before you do it. If the sale is possible, then without the property, it sounds like you can file Ch 7 rather than a 13.

2. Again if the property can't be protected by your state exemptions, then you can ask your lawyer to make a deal with the trustee to set up a payment plan to pay back the unprotected equity as a part of your plan. Whether a family member pays it back in full or you have to pay the trustee off in payments over time will be up to you and your lawyer to work out.

3. If the property is worth as little as you say, depending on how your trustee reacts in these situations, it truly may not be worth your trustee's time to seize your half and try to sell it. This is where having a solid certifiied appraisal really can pay off. If your trustee decides it's really not worth his/her time to come after the property for sale (for ex, it's worth less than $1000), then you could simply state you want to surrender your portion of the property when you file. Your trustee leaves it alone, you complete the plan, and then you are left with the property after discharge.

To know which of these options is best for you, you need to find and retain a really excellent, experienced bankruptcy lawyer that has worked to save properties before for his/her other Ch 13 filers.

So do your homework, read here like crazy, call your state's bar to get referrals, see if any trustees in your local court take private clients (some do), and ask friends and family "for a friend" ;) if they know any good lawyers in town. Even if they aren't bk lawyers, because of the old boys network, every lawyer in town knows good lawyers in every other specialty. Do all of these and chances are you'll find an excellent lawyer to help you file and save the property.

Keep us posted, ok? Good luck!

[lrprn]

I understand that in order to keep "non-exempt" property (like my wife's wedding ring... potentially slightly over the exemption), that the "equivalent value" must be paid.

Skipper, you asked basically the same question when you posted about dealing with your co-owned undeveloped lot.The answer to your question about any and all 'non-exempt' property is the same as the answer with three possible options that I posted to your other question about your co-owned, undeveloped property lot at http://www.bkforum.com/showthread.php?p=319792#poststop

That's why I merged your two threads together.

If you still have questions about non-exempt property and belongings, post your questions - we'll help you sort things out as best we can.

[Skipper]

Skipper, you asked basically the same question when you posted about dealing with your co-owned undeveloped lot.The answer to your question about any and all 'non-exempt' property is the same as the answer with three possible options that I posted to your other question about your co-owned, undeveloped property lot at http://www.bkforum.com/showthread.php?p=319792#poststop

That's why I merged your two threads together.

If you still have questions about non-exempt property and belongings, post your questions - we'll help you sort things out as best we can.

Thanks...

I do have a few other questions that i cannot find a clear answer to; like what happens when a person qualifies for Chapter 13, yet when utilizing the standard expense allowances there is a negative disposable income number result? (The need for 13 is to stay in the home and discharge a heloc). Is there still a 36 month wait, even with a zero% repayment schedule?

For clarity, I would be able to afford the mortgage and expenses one cc debt and heloc is dealt with.

As always, thanks for the patience and opinions!

Skipper