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Business Property for rental makes this nonconsumer case
there are lots of cases on these issues. I have confirmed chapter 11 plans where I had the court rule the mortgage was not a residential mortgage, despite the debtor having lived in the property at the time of purchase.
Take a look at the language of the deeds of trust. There are two types.
1. those that state on their face that they are residential mortgages. You may have a hard time convincing a court these are not residential mortgages.
2 those that state that the mortgage is considered a residential mortgage for a specific period of time, usually one to three years.
If you file the case after the third year, you can use the language in the dot against the lender.
But there are also cases which say you measure the residential quality by the date of the filing of the petition.
know thy judge, and plan accordingly.
If I have a client who cannot pass the means test, I will sometimes recommend moving from the home, entering into a rental agreement, and using the debt as business debt to qualify the case as a business case.
d
Dennis McGoldrick, 350 S. Crenshaw Bl., #A207B, Torrance, Ca 90503 310-328-1001-voice
> On Aug 4, 2014, at 10:15 PM, "Michael Avanesian michael@avanesianlaw.com [cdcbaa]" wrote:
>
> I agree with Sam and I think he explained it better than me but I wanted to add another piece of authority which explains this position further. I did not shephardize.
>
> http://www.canb.uscourts.gov/node/845
>
> http://www.irs.gov/pub/irs-wd/1005029.pdf (was this cited to earlier?)
>
> The above two links support the conclusion that postpetition interest continues to accumulate on nondischargeable debt and the debtor is liable for such interest.
>
> I think the most surprising result is that in a Chapter 7 asset case, the trustee will pay unsecured creditors before payment of nondischargeable interest. Meaning that even if there are sufficient assets to pay all priority creditors and 90% of unsecured creditors, the Debtor will be stuck with postpetition interest on the nondischargeability portion of his taxes -- to the extent they accrued before the principal balances were paid off!
>
>
> Sincerely,
> Michael Avanesian
>
>> On Mon, Aug 4, 2014 at 5:25 PM, sam@southbaybk.com [cdcbaa] wrote:
>>
>> In the past I have filed a couple of cases (NV) where the properties were converted to rental use and I did not draw any challenges to its characterization as non-consumer debt - even though originally the mortgages on the rental(s) were taken out by the Debtors to purchase the properties as their primary residence(s). In both those cases, however, I recall that the Debtors still owned a primary residence as well as the rental unit(s).
>>
>> Also - code section 101 defines consumer debt as debt incurred by an individual primarily for a personal, family or household purpose - so I think I may have gotten lucky.
>
>
The post was migrated from Yahoo.
I agree with Sam and I think he explained it better than me but I wanted to
add another piece of authority which explains this position further. I did
not shephardize.
http://www.canb.uscourts.gov/node/845
http://www.irs.gov/pub/irs-wd/1005029.pdf (was this cited to earlier?)
The above two links support the conclusion that postpetition interest
continues to accumulate on nondischargeable debt and the debtor is liable
for such interest.
I think the most surprising result is that in a Chapter 7 asset case, the
trustee will pay unsecured creditors before payment of nondischargeable
interest. Meaning that even if there are sufficient assets to pay all
priority creditors and 90% of unsecured creditors, the Debtor will be stuck
with postpetition interest on the nondischargeability portion of his taxes
Sincerely,
Michael Avanesian
On Mon, Aug 4, 2014 at 5:25 PM, sam@southbaybk.com [cdcbaa] wrote:
>
>
> In the past I have filed a couple of cases (NV) where the properties were
> converted to rental use and I did not draw any challenges to its
> characterization as non-consumer debt - even though originally
> the mortgages on the rental(s) were taken out by the Debtors to purchase
> the properties as their primary residence(s). In both those cases, however,
> I recall that the Debtors still owned a primary residence as well as the
> rental unit(s).
>
> Also - code section 101 defines consumer debt as debt incurred by an
> individual primarily for a personal, family or household purpose - so I
> think I may have gotten lucky.
>
>
>
I agree with Sam and I think he explained it better than me but I wanted to add another piece of authority which explains this position further. I did not shephardize.
The post was migrated from Yahoo.
Jim:
I will look into that with my case. Have you seen case law on that
point? I'll look it up, I was just wondering what kind of experience
you have that leads you to that. Have you ever had UST problems along
these lines?
Steve
The post was migrated from Yahoo.
Steve:
A key fact which you need to establish is whether the loan against the former residence was taken out while the debtor was living there or after it had become a rental. It is the nature of the loan at the time it is incurred which is usually determinative.
Jim
James R. Selth
Certified Bankruptcy Specialist*
Weintraub & Selth, APC
11766 Wilshire Boulevard, Suite 1170
Los Angeles, California 90025
Telephone: (310) 207-1494
Facsimile: (310) 442-0660
E-Mail: jim@wsrlaw.net
*Certified by State Bar of California as Certified Legal Specialist in Bankruptcy Law.
The post was migrated from Yahoo.
Hello everyone:
I'm consulting on a scenario that I've filed successfully on several
occasions, but want to poll the group as to the success of getting
through a Chapter 7 case as a business case under these facts:
FACTS
1. Debtor is high income and definitely would not pass the means
test in Chapter 7.
2. Her consumer debt is about $45,000, but her former residence,
which she has rented out for years has over $100,000 of debt, and no
equity. It is cash flow neutral - neither making or losing money.
I've filed similar cases without a problem, but this Debtor's income is
high for HH size.
QUESTION: Has anyone had the UST push back when characterizing such a
case as a business case?
Thank you
Steve
Law Offices of Steven B. Lever
>
> Steven B. Lever
>( Tel. (562) 436-5456 ext. 1
>( Fax (562) 485-6886
>* sblever@leverlaw.com
> www.leverlaw.com
>
The post was migrated from Yahoo.