transfer of debt while in Bankruptcy?

[mike69]

I undersand this is unlikely but, Is it possible in 11 or 13 to have a family member assume the debt of a secured loan so the bank no longer has an interest?

[LadyInTheRed]

I don't know the answer to your question. But, I think you are using the wrong terminology.

Assuming a loan means the security interest still remains with the same lender, but a different person is responsible to make the payments, usually (and perhaps necessarily) because they purchase the asset securing the loan. My guess is that what you really want to do his have the family member refinance the loan, so that they payoff the bank and recieve a security interest. You then make payments to the family member instead of the bank. That would require trustee approval.

ETA: It would require trustee approval in a Chap 13. I have no idea how things work in a Chap 11.

[mike69]

Thanks Lady.

Would a transaction like this show up on Pacer?

[justbroke]

I undersand this is unlikely but, Is it possible in 11 or 13 to have a family member assume the debt of a secured loan so the bank no longer has an interest?

Like LITR, I don't know what you are trying to do. If you are just selling your asset (secured by a loan) to a family member, you would sell it to them for at least the market value and that, as well, should pay off the creditor (bank).

As stated, you would need Trustee and court approval to sell property in a Chapter 11/13.

It's not a transaction. There would be a Motion to Sell and that would need to be approved. The Order Granting the Approval would be on the docket.

What are you REALLY trying to do and what type of property is this?

[mike69]

I want to keep some investment property, I am current on payments. Can I have family members pay the bank loan and become my secured lenders while I complete my 13 plan?

[LadyInTheRed]

I want to keep some investment property, I am current on payments. Can I have family members pay the bank loan and become my secured lenders while I complete my 13 plan?

With court approval, probably. But, what advantage do you hope to get? Will the family member let you not make payments during the Chap 13 or 11? Have you already filed BK? Has your plan been confirmed? Have you consulted with a BK attorney?

Is this the same issue you asked about in http://www.bkforum.com/showthread.ph...r-11-Questions.

Your questions are very vague. For us to help you, you need to be more forthcoming with the details of your situation. If you are trying to help a friend, perhaps your friend should register and post his/her own questions.

[justbroke]

I want to keep some investment property, I am current on payments. Can I have family members pay the bank loan and become my secured lenders while I complete my 13 plan?

I don't understand why keeping the investment property would be a problem in a Chapter 13 or Chapter 11. You would just need to make sure that any the unsecured creditors get at least as much as they would if you liquidated that property. Also, if it's investment and not generating money, that's problematic right from the start.

Let me just say that you can actually keep what you can afford in a Chapter 11/13. I have not problem with that at all. Even having wrote that, I don't know what you're trying to do. What is the burden of paying the bank? Either way, you are going to need to have a feasible plan and if this is not an arm's length or at least a "market value" transaction, it just looks too strange.

Again, what are you trying to do? Are you trying to not pay the unsecured creditors the value of the property? Are you trying to reduce the payments to the unsecured creditors? What is the thing you are trying to accomplish?

[despritfreya]

I think the problem is that OP is diverting income to keep property that is not producing sufficient income to be self sustaining and he/she wants to sell it to someone (a family member) who will take over the payments. If my assumption is correct why not just have the 3rd party (family member) make the mortgage payments directly to the lender while OP is in the 13? The Trustee should not have an issue with this as OP would not be diverting his/her disposable income. The lender should not have an issue as it could care less who makes the payments so long as payments are made. A sale to the family member would not be necessary and OP can compensate the family member for the payments made at a later date.

If OP really wants to sell it to a family member then the sales price must be market value, must at least pay off the lender in full, and yes, must be done with a court order. Any “profits” not covered by some sort of exemption would have to be turned over to the Trustee for the benefit of the unsecured creditors.

And. . . as mentioned before, if there is equity in the property that is not protected by some exemption, if OP is keeping the property (regardless of who pays the mortgage) OP must pay the non exempt value to his/her unsecured creditors over the life of the Plan.

Des.

[justbroke]

I figured that Des. I just wanted to see it in writing. I had this same issue in my Chapter 13 and this is why I ended up modifying my plan (prior to confirmation) in order to surrender one of the investment properties. It was not worth it in my particular case (for the rental property). Just a series of bad circumstances which triggered my bankruptcy.

[despritfreya]

Yes, JB. And in many cases such property should be surrendered. But it takes time for folks to come to such conclusions. It is very emotionally difficult to let things go. Once one gets past the emotion and looks at it from a purely business point of view, it is much easier to make the tough decisions.

Des.