Going From Chapter 13 To Chapter 7 Property Concerns....

[ihaveqs]

Me and my wife filed Chapter 13 Bankruptcy about a 16 months ago. Struggling to keep our make our house payment in Chapter 13 we are looking to let the house go and convert to Chapter 7. A few months back, well after the initial Chapter 13 filing we found out that 23 months ago my mother-in-law put two pieces of property in my wife's name. One is solely in her name paid off and the tax value is appx. $40,000 the other is in my wife's name as well as her sisters name and is paid off and the tax value is appx. $17,000. As stated we initially filed and these were in her name but we were not aware of it. They were never mentioned in the bankruptcy proceedings by us or the court. The reason her mother did this was she was trying to protect them during a nasty divorce. My wife has never paid a payment or made money off of these two properties and the taxes are current and paid by her mother. So I guess my questions are what are my options...

1. Get them changed into someone else's name before trying to convert to Chapter 7?
2. Report them as is which may hurt my chances at converting to Chapter 7?
3. Try to stick with my Chapter 13 and hope it doesn't get caught for the next 3 years?

My main concern is keeping my mother-in-law in her house as she had nothing to do with some poor decisions we made in the past. While it would have been nice to know she did this before we filed at the same time we did not let her know we filed simply because we felt the less people that knew the better. Admittedly we were embarrassed. Funny thing is my wife never signed anything, never received anything in the mail and her social is not attached to anything, just her name which can be pulled up on the local tax site!

Don't know that it matters but the filing was in NC in which we reside. The properties in question are in SC in which my mother-in-law resides.

Another dumb question that I should already know... Is my lawyer on my side or on the same team as the trustee? I guess I'm asking is if I go to him for advice on this will he report the properties to the trustee?

If anyone needs any additional questions answered to provide advice I will be more than glad to answer them!

Any advice would be greatly appreciated!!!


Sincerely,
Stressed Out In North Carolina

[Flamingo]

What you need to do is report the properties in your wife's name immediately to your Chapter 13 attorney. Not to do so could result in dismissal of your chapter 13. I would not do anything until you speak with your attorney.

[ihaveqs]

Any other thoughts or input?

[catleg]

As long as your chapter 13 plan is paying to unsecured creditors, an amount greater than the liquidation value of the property, I would think you should be ok. But you should probably run it past your attorney for professional legal advice.

[ihaveqs]

Total unsecured debt filed was 70k. I'm only paying $222 a month toward that so I don't think that would cover it. The house payment is what has us strapped $1500.00. Also upside down in the house...Owe $192k wouldn't sell for $150k.

Another question...with her signature,SSN, DOB not on any documents how can they even prove it is her? I guess it looks like I'm trying to hide something and really I guess I am but the truth is as we have never had a stake in these properties physically or monetarily other that at least one of them would probably have been willed to my wife down the road. I guess this really is a debt prison! I do take blame!!!! lol

I just want to know if there is a better option for me than the Chapter 13 I'm in without my mother-in-law not loosing her property?

Should I just roll the dice and try to make the 13 work and hope they don't find out about the properties?

Is my lawyer on my side or would he automatically report this to the trustee if I talk to him about it?

Thanks Again!

[LadyInTheRed]

Your attorney represents your interests, not the trustee's. He is on your side! You need to let your attorney know about theses properties so he can advise you. You don't want him to find out when he gets a motion to dismiss your case because the trustee or a creditor found out about your wife's interest in the properties.

[catleg]

Well your attorney is on your side but he's also an 'officer of the court'. If you've gotten under the radar this far you might consider the old maxim 'loose lips sink ships'. It's a complicated legal issue and you could end up costing more in lawyer fees than the properties are worth in some outcomes. It kind of sounds like you ought to have enough exemptions to protect the property anyway, but it could be a big mess legally.

[lrprn]

The right course to follow in this situation is to notify your lawyer as has already been wisely recommended. Catleg is a bit off-base on this one - your lawyer is bound by your privileged conversation about the properties. He/she is not "an officer of the court" free to share any information you tell him/her willy-nilly. Bankruptcy is not study hall in high school

Your lawyer is there to protect *YOUR* interests. He/she can't do that if you withhold vital information like these properties from him/her. One of the biggest mistakes that filers regret is not telling their lawyer something like this until it's too late. Don't let your fear keep you from doing the right thing - call your lawyer and tell him/her about the properties as soon as possible.