I can keep 2nd home in chapter 7 not 13?

[UpsideDownMI]

I have been visiting this site for a few months now without posting. I have found this site to be a very valuable tool in understanding and dealing with the bankruptcy process. So thanks to all who have posted.

In the past week I have consulted with 2 attorney's to discuss the options available to me through bankruptcy. I was shocked to find out that I can keep my vacation home in chapter 7 but not a 13. Although technically I can keep my vacation home in a 13, I would have to pay my unsecured's 100% in my plan to do so. Since I owe unsecured's over 90k that option is virutally impossible.

However, both lawyers stated to me that since there is no equity in my vacation home (I owe 68K, worth 60K) I would be able to keep it without any objections from the trustee. They also stated that I can include the expense on my schedule J. One of the attorney's stated that he has did this successfully with many other clients. He stated that we would go in showing a severe negative in our expenses to accomplish this. While I am hoping they are right, I am finding it hard to believe that the trustee will let the unsecured's get nothing, while I retain 2 properties. Does this sound to good to be true? Yours thoughts are welcome and appreciatted.

[justbroke]

That is absolutely true. This comes from someone who had a second property, in a Chapter 13. Your lawyers are accurate, but it's not that you can't keep property in a Chapter 13, you just need to be able to afford it!

You should go through the numbers and see if you can't afford it. Did you know that you could do a balloon payment at the end of the Chapter 13, to pay the unsecured creditors their 100%??? The Trustee told me that. That's because the Tee thought I was asking to keep the property. How you do this, is refinance towards the end, and cash out... to pay the unsecureds. Nothing in the code prevents you from paying the unsecureds in a lump sump (balloon) payment at the end of the Plan.

[JRScott]

Assuming the properties have no value, that is no equity there is nothing there for the trustee or creditor.

Now depending the trustee may well object to the expense but the lawyer is much more familiar with your district than we are. If both suggested the same thing then it is likely it can be done there. You might go see a third just to make sure .

[UpsideDownMI]

Thanks for the feedback. None of properties have equity at this point. I did crunch the numbers for a 13, but have determined that it would not be feasible for me to sustain over 5 years. The balloon payment is a very creative idea, but I had to have my case dismissed because I could not obtain financing.

[justbroke]

Thanks for the feedback. None of properties have equity at this point. I did crunch the numbers for a 13, but have determined that it would not be feasible for me to sustain over 5 years. The balloon payment is a very creative idea, but I had to have my case dismissed because I could not obtain financing.

Very astute observation. True, you won't get your discharge if you can't make that lump sum payment. You've done your homework. You get an "A".