Land Contract "Equity" and Chapter 7

[backontrackOH]

I am currently the buyer in a land contract in Ohio. I made a down payment and have made several principal payments on the loan, all to the owner of the home.

How will the 'equity' I have in the home be viewed by a trustee if I file a chapter 7 bankruptcy? Ohio has a $20,200 homestead exemption and my 'equity' totals less than half of that amount. Will that protect my 'equity'?

Thank you in advance to anyone who may be able to help.

[tobee43]

here's a post about land contracts and it may be helpful to you....

land contracts do vary state to state and usually leave the seller of the land in a difficult position...most likely the seller still has the deed, so it will be interesting as to how it will be handled in your state.

http://www.bkforum.com/showthread.php?64659-Chapter-7-and-Land-Contract&highlight=land+contracts

[backontrackOH]

I have no intentions of surrendering the home! It took me forever to find an owner willing to enter into a land contract. All payments have been made on time. Does the owner even have to be notified? I thought the land contract would be viewed as a type of lease. A lease with 'equity', I guess.

[backtoschool]

The owner has to be notified that you are filing. This is a debt that has to be included in your petition. You can reaffirm the debt if you want to keep the home. The land contract is a secured loan since the owner still has a lien on the property.

[tobee43]

I have no intentions of surrendering the home! It took me forever to find an owner willing to enter into a land contract. All payments have been made on time. Does the owner even have to be notified? I thought the land contract would be viewed as a type of lease. A lease with 'equity', I guess.

yes i agree with bts...the owner will have to be notified and it will be on the petition as well...you will have to list all that info...in that thread which i posted i explained a bit what exactly a land contract is....and if in fact the seller or owner still holds the deed they must be notified of your pending bk.

in most cases it's not considered a "lease" as such...it's usually viewed as an option to buy...or purchase...it's a way around a bank or..."owner" financing.

[tcreegan]

Hi backontrackOH,

How will the 'equity' I have in the home be viewed by a trustee if I file a chapter 7 bankruptcy? Ohio has a $20,200 homestead exemption and my 'equity' totals less than half of that amount. Will that protect my 'equity'?

The trustee will look at it as exempted from the BK estate. You bet it protects your equity, that is what it is supposed to do!

Good luck w/ this!

Tom in Colo