Where does Trustee get info from?

[Worriedmom4]

Hello all

I have been lurking here for some time and I thank you for sharing your situations. Reading the forum has sometimes eased my nerves about the BK process. I am nervous once again and can't seem to find any prior post that discusses a similar situation as ours.

A little history, filed for Illinois BK this past August. Had 341 meeting in October. The trustee seems to think we are an asset case, he is looking at our house. He came to this conclusion by looking at Zillow while we sat in our meeting. House is listed on BK petition for $178, which was on Zillow 4 months ago. Realtor appraised house last year for $170. Now, Zillow shows it at $213. Yes, that is a big increase in just 4 months. We have done extensive research, getting comps, asking Realtors, etc for the value of our home. We did not want to lose the house and made that very clear before filing. Looking at the comps, the highest priced home sold in our area was $180. There are other homes in the area that have recently sold for much more, BUT, these houses are not at all comparable to our home i.e. more bed rooms, baths, square footage. Our attorney says this is why our house went up in value (on zillow) over a four month period. The trustee apparently had an appraisal done, however, no one was here to view our home. It must have been just a drive by as we are not sure how he got an appraisal.

I just received the Notice to Extend time for claims. Now here I sit, nervous as heck, about what is going to happen. My attorney said that if the trustee feels our home is worth more, we can come to some type of payment agreement for the difference or convert to a chapter 13. This just boggles my mind. If we could make large monthly payments, we wouldn't be in the situation we are in to begin with. Where would this trustee be getting his information? Does anyone know if a case can go from an asset case to a no asset case? My attorney said several times that we are not going to lose our home, that the trustee is just looking for money but I am still terrified about it. The thought of it literally wakes me up at night. I have read posts about the Trustee looking at tax refunds so I thought he might do that to us but that subject hasn't come up.

Sorry such a long read. Not sure if this has happened to anyone or not but any insight or comments would be appreciated. I was hoping this would be a somewhat easy process (ha ha) and was not expecting the trustee to do this.

Thanks much.

[justbroke]

Yes, a case can go from an asset case to a no asset case, and vice-versa! I was an "asset" case for Chapter 7 because I converted from Chapter 13 (all Chapter 13 cases are asset cases). The Trustee later changed it to a No Asset case.

As for value, what you could do is order a full appraisal on your home. I mean, hire a licensed appraiser to perform an appraisal on a URAR (Uniform Residential Appraisal Report). You may also want to ask the appraiser if they are willing to testify in court, if necessary, and what that rate would be. The Appraisal should be under $400 for a home of that price. If the appraisal comes in lower and you have no "unprotected" equity, then you can challenge the Trustee.

Remember, you can go before the judge (through your attorney) to say that the value of the property is less. The Trustee probably did an "electronic" appraisal or just looked (literally) on Zillow. It's now your "job" to prove the Trustee wrong. If the Trustee wants to order a full appraisal, they can do so, but they typically don't like to unless they KNOW there is money (because it will come out their own pocket/budget if it comes in lower than expected).

I'd ask my attorney about having a full appraisal done. That way we are not all just sitting here "guessing". The appraisal will be best evidence unless and until someone testifies under oath as an expert witness.

[keepsmiling]

This is what I worry about too. My house is worth nowhere near its Zillow number. That number does not take into account whether your house is brand spanking new or crumbling into dust.

Good luck, keep us posted! Make that tt work for his money

[btbeme]

I haven't yet heard of a case where the Trustee takes a home based solely on the Zillow number. That may spark interest, but an appraisal or a less expensive professional market analysis (a PMA) from a licensed Realtor will hold much more weight in a valuation disagreement. It is doubtful that has happened yet; however, the ball is likely in your court to get a professional opinion or two that show the true value.

[AngelinaCat]

Hi worriedmom4; welcome to the forum!

By all means follow the excellent advice given above. I cannot add anything new to what has been offered.

[DaisysMom]

I had something similar happen to me. My attorney had a list of appraisers who were BK friendly and I had my home appraised. During the appraisal, I was very honest about all of the problems with the home and he took pictures, which were put right into the appraisal. My home ended up being appraised at 40K less than what the county auditors office had it listed for. Put me right under the homestead exemption.

Good luck and welcome to the forum.

[keepsmiling]

When we first started the process, we told the attorney what our home was worth, based on a recent sale of a house that had been sold cheaply and rebuilt from the ground up (which is what ours would need).
She did an "appraisal" and called back with an outrageous number that she got somehow... I assume by looking at the computer or doing a driveby.

We were distraught for days.

We had a comp done by a realtor that came in at 100K less than what she told us.

We fired that attorney.

[helpmeout]

Before agreeing to pay more for your house, get an professional appraisel done. Zillow is the least reliable valuation method. The house that I walked away from was listed at $270K at the time of my BK (which was a few thousand more than the real estate agent's appraisal). The bank sold it last September for $157K (probably has something to do with it needing a lot of repairs).

In fact, if I were you, I would seriously consider walking away from the house. Let the Trustee attempt to sell it for more than it is worth. Once that doesn't happen, you will be switched back to a No Asset case. Either way, it's going to take months for it to be done.

As an aside, you are under no obligation to keep your house showcase clean.

[kawh]

This pisses me off. Professional appraisals are not cheap, so do one only if you have to. A new realtor appraisal should be good, as realtors are not motivated to undervalue their listings. My house also is a bit overpriced on Zillow, even though its half bath is not listed correctly there. I claimed my home on Zillow, but didn't correct the bad info, as I didn't want to give the property tax people any more reason to raise my taxes.
But if I lived in a different state I'd be in deep s---. It is so unjust that the states have different laws on whether families can keep housing or be put out on the streets or made to pay when they can't afford anything. Talk about kicking someone when they're down!

Good luck with this, it sounds like you are on firm footing and will win.

[justbroke]

A realtor appraisal is not good when the Trustee has already questioned the value. This will likely result in a hearing on the valuation and you want the best evidence. Unless the Realtor is a license appraiser in that state, the licensed appraiser's written appraisal will trump the Realtor's written appraisal.

If you are serious about valuating property, then you should get the next best thing to sworn testimony of an expert witness, and that's a licensed appraiser performing an appraisal and documenting it in writing (usually on the URAR). When I did my lien strip, I did not play games. I paid to have a real appraisal performed by a licensed appraiser and the bank and Trustee did not question it at all. Use of a CMA (comparative market analysis) or BPO (broker opinion), the tax appraiser's value or Zillow (or some other "electronic" appraisal method), is not the "best" estimate of fair market value. If the value is too close to an exemption, those are not reliable methods, although a particular Trustee may use or accept them from the debtor.

[kawh]

... The trustee apparently had an appraisal done, however, no one was here to view our home. It must have been just a drive by as we are not sure how he got an appraisal.

The OP doesn't say why she believes the trustee has an appraisal in hand, but we know the trustee likes to look at Zillow during 341 hearings.
I would not pay for an appraisal until the trustee does, or gives out some specific information.
Maybe the trustee was just being diligent in obtaining the extension. Maybe the trustee wants the OP to pay for it, thus relieving him of the expense. A driveby appraisal is not much to rely on, let the trustee spend some money, meanwhile the OP can line up some good appraisers on her own to refute any BS that actually comes up.

[Worriedmom4]

The OP doesn't say why she believes the trustee has an appraisal in hand, but we know the trustee likes to look at Zillow during 341 hearings.
I would not pay for an appraisal until the trustee does, or gives out some specific information.
Maybe the trustee was just being diligent in obtaining the extension. Maybe the trustee wants the OP to pay for it, thus relieving him of the expense. A driveby appraisal is not much to rely on, let the trustee spend some money, meanwhile the OP can line up some good appraisers on her own to refute any BS that actually comes up.

My attorney met with us last week. Said that the trustee said we are an asset case and that he, the trustee, is looking at the house because of the appraisal. I said "what appraisal" which made my attorney question the trustee's intentions as well. I was told I had to wait to see what motion the trustee was going to file as my attorney is not sure what is going to happen next. I am still waiting, and like I said, having nightmares about the house.

And I do appreciate all the responses. Very good advice here. I certainly don't want to walk away from my home, it's mine and we have worked hard for it. It was suggested by our attorney that we put it on the market and see if the trustee can sell it for more. I'm not going that route. I have way too much anxiety and I certainly don't want to worry my kids. Knowing the luck I have lately, someone will offer an outrageous amount and I will end up without my home. We are ready to prove what our house is worth and if it does require us to hire an appraiser, then so be it.

As KAWH said above, this pisses me off too. We never thought our lives would take some of the turns it has, and Bankruptcy "PROTECTION" is there to help us get a fresh start. I now have to worry and possibly make a payment arrangement to the trustee to get that fresh start. Although that payment arrangement wouldn't be as high as the debt we are getting rid of, that fresh start requires us to struggle a little more in the end, and the worry that goes along with it is something I don't ever want to deal with again.

Now I am venting Thanks again for all the good vibes!

[justbroke]

Yes, just wait to see what the Trustee does and see if they make any motions to actually try to sell or to get you to pay the difference. Until you know the valuation, valuation method, and the Trustee's true intentions, it's not going to matter much. Speculating is fun, but at the end of the day you will either need to show that the Trustee is wrong, pay the difference between your exemption and what's "exposed", or allow the Trustee to just take the asset and sell it.

Valuation of the property should have always have been a concern, especially when you are close to having any sort of equity. Trustees are much more apt to examine property values more closely when all the "quick estimation" tools are pointing to more equity than the schedules show.

Sending good vibes.

[Worriedmom4]

Thanks Justbroke. I should mention that my nightmares are due to what little knowledge I have. When my attorney said he wanted to speak with us about the house, I thought that was it, end of story. I instantly had us homeless and on the street. I did not realize that the trustee really doesn't want to sell my house, he just wants payment. I will try to prove any way I can, what our house is worth. Can't wait to see what he comes up with and I can't wait to get this behind me!!

[kawh]

As helpmeout said, you are under no obligation to have a clean house or otherwise try to get the best evaluation of your property. If it comes down to getting an appraiser in, you could even borrow a cat if you have to. One of mine periodically pees outside the litter box no matter what strategies I've tried, she's just old. Nothing like a distinct smell of kitty pee to remind you a house needs some major fixin up.