Questions:Planning for Ch.7 with jointly owned house and developer may want to buy it

[LibertyJen]

Hi,

I'm a longtime lurker here and have been planning on filing Chapter 7. It should be fairly straightforward.

I'm in NY state. I was planning on staying in my home, which is jointly owned by someone not a party to the BK. I am not planning on reaffirming the mortgage. Recently, I found out a real estate developer bought other homes in this neighborhood. If I sold mine, I would be making a profit.

What is the best way to go about this? I'm thinking file the Chapter 7, don't reaffirm, then sell to the developer after the discharge. Also, the party that jointly owns the home with me wants his name off of the deed and mortgage. He has no interest in the property or proceeds from it.

Any further advice would be greatly appreciated. Thank You!



Jen

[bcohen]

Unfortunately, your proposed strategy will not work, unless you can exempt the value of the house on the filing date.

If a developer has been buying up houses in your neighborhood, that fact is public record, and a savvy Chapter 7 trustee will discover it.

If the valuation of your house (based on what other houses in the neighborhood are selling for) exceeds your state's homestead exemption, you can be sure that the trustee will file a motion to have your case declared an asset case, and to try and sell the house for the benefit of your creditors.

If you believe that it would be possible to sell the house for a profit over the mortgage balance, then it would be best to do that BEFORE you file for bankruptcy, and spend down the non-exempt funds on living expenses, deferred medical/dental care, car repairs, etc.

[LibertyJen]

I have enough exemptions to cover the house, plus it is jointly owned, so the equity is split. I only own half of it. The other houses are down the road and they haven't closed yet on their sales. The developer doesn't necessarily need my house, but he could use it as a "buffer" of sorts. I have a long time to decide whether to see it, because he wouldn't be using it or tearing it down. He's mainly interested in rezoning the neighborhood and tearing down the houses he already bought. They are on prime land for commercial development. My house isn't. My attorney is actually a Trustee. The other Trustee isn't really picky from what I understand. Could a Trustee actually force me to sell when he wants? I have a 6 year old child here and am expecting again. The developer is allowing homeowners a post possession agreement where we can live here and just pay taxes for at least 6 months, and in my case, probably quite longer.