If you have to convert a chapter 13 to a chapter 7, what happens to the asset you were trying to protect in the 13? If you lack the exemption to exempt the full amount, and the asset is sold, does the trustee have to give you your exemption amount that you could have exempted? For example, asset is worth $7,000 - with the allowed exemption, you can only exempt $4100 - If the asset is sold, do you get the $4100 from the sale?
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Trustee sells asset, pays you the allowed exemption and uses the rest to pay himself and the creditors. -
This post made me wonder....If im under a chapter 13 and the asset Im protecting is a vehicle and I sell said vehicle paying the loan off is it safe to assume I could convert to chapter 7 for the credit card debts or should I be worried without the car loan I wouldnt qualify for chapter 7?Comment
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What do you mean by "protecting"? Are you protecting it from being repossessed because you were behind in payments when you filed a 13? Or, are you protecting its non-exempt value by paying that value to your unsecured creditors over the life of the Plan?Originally posted by da242911 View Post
The general rule is you cannot sell property of the estate without a Court Order therefore, in either case you better not sell it without first checking with your attorney and/or your Trustee. There are exceptions which would be based upon the "vesting" language contained in the Order Confirming if your Plan is Confirmed but best to follow the general rule, especially if you are contemplating converting.
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By protecting I just ment that the bank wont be getting the car back. My payments on it are and always have been current. The amt deducted from my checks is more than I can handle. But at this point I have a buyer lined up and would really rather just file 7 and be done with it. I asked my trustee and was directed to my attorney. Who acted like it would be no big deal. And I was instructed to just bring in the paper from the bank showing where I had paid off the loan. The fact of how easy and no big deal he made it sound is what made me second guess him. What Im scared to death of is selling the car and getting stuck with my same trustee payments in the chapter 13. If thats the case then why not keep the car.Comment
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If all you are doing is selling it to clear the lien and the vehicle is worth equal to or less than the lien then I too see no problem. It is only a problem if you sell it for less than its value, thus harming the creditors of the bk estate. If you otherwise qualify, why not convert the case, ask the 7 Trustee to abandon the asset (assuming it has no non-exempt equity) and then sell it to pay off the lien holder?
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