can i keep my CASH before, during, and after filing 13?

[Moneypenny]

I am thinking of doing a 13 if my HELOC wont settle, but I would have some money saved up in the bank at that point. Let's say I had a lot of money but I qualified for ch13 in other ways, including the means test. What happens to all the money I saved up? Specifically this would be a ch13 following a ch7 (4 years after, CA for both) , so the debts are discharged, but I want to save the house and cut down the HELOC which is not reaffirmed but completely underwater.

Here is something I read, pasted below. It this true?

"In Chapter 7 bankruptcy the court will appoint an administrator called a trustee, and the trustee administers a liquidation process. Liquidation means the trustee tries to raise money to pay your debts by taking your nonexempt cash and selling off any of your nonexempt property. Chapter 13 bankruptcy, however, does not involve liquidation, so exemptions are generally irrelevant and your cash is always protected in Chapter 13."

this might not be right-- at least in CA i think the ch7 exemptions only include about 1700 in "wild card" which I guess could be cash. Might be wrong.

Anyone know? Also this might be strange in my case since there is only an already discharged underwater HELOC and no other debts, so any cash would only be good for distributing to... who? The bank that I don't owe any money to? Or would this be considered an unsecured debt under the 13, even though it was discharged?

thanks!

[kornellred]

What you seem to be asking is if you can have your cake and eat it, too. Each BK district (or maybe State) has it's own rules with respect to exempted amounts of cash that can be retained in a Chapter 13 bankruptcy. But, generally, no - you cannot keep a large amount of cash - the reason should be obvious. A bankruptcy attorney will give you advice on approved ways of converting cash into exempted assets. Chapter 13 requires the application of all DMI to plan payments, and although cash in the bank is not income, it is certainly disposable.

[momofthree]

CA has a very generous set of exemptions. If you use system 2, you can exempt somewhere around $22k towards any property, including cash.

[Moneypenny]

No I am not asking if I can have my cake and eat it too, I was asking what I was asking with no moral meaning behind it. I am more than happy to play by the rules whatever they are and I just wanted to know what they are. Perhaps my subject heading-- trying to attract attention and help-- was a little too tabloid and offensive a little?

thanks... I read the CA rules and I saw a lot of different property types exempted, but not cash, except for a wildcard for like 1700 but I think that was rule set 1. I will try and find better info.

I am overseas now and unable to contact a lawyer. Trying to make a decision. Anyways, the house is falling apart and leaking roof and old everything... so I guess there are plenty of places to put money in an underwater house I am committing to by choosing 13 over foreclosure.

[Pandora]

maybe I'm missing something - but if you discharged both mortgages in your ch. 7...why on earth would you do a Ch. 13? Why not just walk away? There will be no foreclosure if you didnt reaffirm either...which according to you, you didnt.

IMO its a waste of money not to mention years...especially since you said the house is basically in ruin. ??

[Moneypenny]

A FC is worse than a 13 for getting a mortgage in the future, except for considering the longer time it takes to get out of a 13. Also, depending on which crystal ball you use to determine property values in the future, the 13 could be a boon whereas in the same scenario the FC would mean buying into a more expensive market. But its the access to and terms of a future mortgage after FC that is really on my mind.

The house is not in ruin but does need a new roof, new central heat/air components, new gutters, and has dry rot problems on exterior deck which may or may not have spread to the house.

But, I am thinking of the FC route now. It is not true that there will be no foreclosure, even though the mortgage debt itself is discharged in the 7. Since I still hold title, as would anyone discharged in 7 and not reaffirming, there would need to be a foreclosure or short sale before I would be free of the house.

[Pandora]

But, I am thinking of the FC route now. It is not true that there will be no foreclosure, even though the mortgage debt itself is discharged in the 7. Since I still hold title, as would anyone discharged in 7 and not reaffirming, there would need to be a foreclosure or short sale before I would be free of the house.

Yes - technically there will be a foreclosure - however your obligation to the house was discharged in BK, therefore you should not take a "double hit" on your credit report. It should show as IIB is the going consensus on the forum.

Even with a FC - you will still hold the deed / title until the lender decides to transfer; there are many on this forum that are still waiting for title/deed to transfer and its been years since their FC. Cant make the lender move any faster than what they decide unfortunately.

[LadyInTheRed]

thanks... I read the CA rules and I saw a lot of different property types exempted, but not cash, except for a wildcard for like 1700 but I think that was rule set 1. I will try and find better info.

System 1 has no wildcard. System 2 has a small wildcard, plus you can use the unused homestead exemption. I think it is the unused homestead you are missing. See my blog for links to current exemption information.

[Moneypenny]

yeah, missed the unused homestead-- a really bad omission on the site I checked! That makes a huge difference.

Are you sure that FC does not show up on credit score for mortgages discharged in a ch 7?


Even so , there is a difference between credit score and the full report.

The FC is still recorded and even after it eventually disappears from the report, it will "show up" in every application for mortgages for the rest of your life.