Chapter 13, equity in our house, will that affect payment plan?

[firsttime]

We're thinking that Chapter 7 won't work for us, as we have equity in our home and are worried about our business being looked at as an asset and then being sold off. If we do Chapter 13, we fall WAY below the means test and don't really have disposable income. Will they then look at the equity in our house and make us sell? Will our business be affected? Honestly, we can't afford a big payment plan, if we could we would have been able to continue our creditcard bills! The only debt we have is creditcards and doctor's bills. We're worried.

[AZNoName]

How much equity do you have? I think the max in CO is 60K unless youre age 60? My family is filing chap 7 and their business didnt come into play, but it's an LLC. How is your business structured?

[firsttime]

Thanks

We have, according to ZILLOW, about $20K above the homestead and the 7% that they allow for agent/closing costs. We are an LLC. Everything flows to us, so we're afraid that they'll look at it as an asset and want to go in and take things. I don't think Zillow is accurate though. HOw do they determine home price? We were thinking of going Chapter 13, but worry about our equity there as well.

[AZNoName]

Im filing 13 and the atty asked for a copy of the Zillow estimate on our home (we're surrendering it, upside down 120K, ugh!)

I think you might be in the clear with your exemptions. Like I said, my family is filing chap 7 and i dont believe their business is affected. Im not an expert though, better check with an attorney! They will give you the facts

[firsttime]

Zillow is so not accurate though, incredible. We've seen an attorney and going back on Monday to discuss different options. We would have loved to get the equity out so we could pay bills, but we couldn't qualify.

[AZNoName]

home values are anyones guess in AZ. My neighbor just foreclosed and sold at auction for 75K. I owe 200K on mine! Zillow shows the value at 85K.

[justbroke]

Perhaps getting a comparative market analysis (CMA) from a licensed real estate agent in your area would give you a "good" estimate of the value. Of course, a full appraisal will give the better value, but just start with the CMA. When you have equity, you really need to get the best value and Zillow, Trulio, You-name-it-oh, is just not going to work.

[LadyInTheRed]

If you have non exempt assets and file a Chap 13, your plan must pay at least the value of the non-exempt assets to your unsecured creditors over the life of your plan. If you don't have any disposible income, you won't be able to propose a feasible plan and would not be a good candidate for a Chap 13. If you pass the Chap 7 means test by a large margin, a Chap 13 will probably be real tough even if you are able to get a plan confirmed. The people who have the worst time in Chap 13s are the ones who easily qualified for a 7 but filed a 13 to save assets.

I agree with JB that you should get a CMA to get a more reliable idea of how much equity you have in your home. If you have more equity than you can exempt, you may want to consider selling the home instead of filing a 13. Another option is to file a 7 and buy the non-exempt equity from the trustee if you have the means to do so. Bring detailed info to the attorney about your income and assets so he can best advise you of your options.