What happens to an overseas home in Ch. 7?

[joe1]

I have a second home in Central America, where I am from, though I currently live in NY. Currently, my 2 kids, 20 and 22, live in the Central American home. I think I may be able to keep the NY home due to the homestead exemption here. I've been looking for information about how the trustee goes about collecting and selling a debtor's foreign assets. I intend to file for Chapter 7 bankruptcy in the near future, but not sure exactly when.

I have about $76k in equity in the foreign home, which has a value of $134k (mortgage of $58k). I've heard that sometimes the trustee will not pursue an overseas property if it will be difficult, time consuming, and most importantly, will cost more to recover and sell than will be brought in through its sale.

So I'm curious where I could look to find the info that would help me answer this question. Also, would the country the home is in, or that my children are living there affect whether or not the trustee will pursue it?

I am very concerned and will appreciate anyone who can help me out. Thanks so much for making this forum a great place to find valuable information for those who are going through tough times.

[bkfdrusa]

I heard from my Lawyer that If the Trustee wants to fly overseas and see the home and pursue the selling process, some one has to pay for his expenses. Unless the creditors are willing to pay that, Trustee will dismiss that. Also, it depends on the laws between US and the other country. Most of the creditors won't even show up for 341 meeting.
It is not that easy process to get that money back to US. Creditors won't come as collective. Unless the overseas property is worth in millions, you are ok. Also, the overseas property they look at book value, not the actual private party value.

[joe1]

Well this is good news....

but even if the house can get $100,000 in a sale, what is stopping the trustee from flying down there, or arranging with an agency that handles this sort of thing, and getting the house sold? even if all of the costs and expenses associated with selling the house runs to $40,000, that still means that $60,000 was recovered. That's still a pretty big piece of change relative to the total amount of the estate. What do you think?

Also, how can I look into what the policies and laws are in this type of situation of the country where the house is located? Wouldn't they have to respect the judgement or decision in the US (comity)?

Thank you very much for your help.

[justbroke]

Even worse, in Mexico, for example, an immigrante (immigrant) can't even own property. It's held in a trust. Could be problematic for the trustee.

[HHM]

In principal, a BK covers any assets are you own ANYWHERE. Foreign real estate is treated exactly the same as any other asset. If it has non-exempt equity, that equity becomes subject to liquidation by the BK trustee. Thus, your questions is more practical than legal. The trustee will have the legal right to liquidate, the issue is whether the trustee, will, in fact do so.

With that much equity, I am willing to bet yes. Also, the trustee can keep your case open nearly indefinitely in order to administer non-exempt assets. It will probably come down to the country in which the home is located. As Justbroke pointed out, in Mexico, non residences do a land lease, that is, you lease the land but own the home on top of it (Mexico treats the "house" like personal property). That type of deal is tough for the trustee to do anything with because the lease usually terminates when ever there is any changing of hands of the property, so the trustee doesn't have anything to sell.