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Chapter 20 and Secured Debt Limits
Yes, still over 109(e) secured debt limit, see 102(2).
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On Wednesday, October 30, 2013 10:54 PM, Michael Avanesian wrote:
It's quite complicated and I've never done a 7 or 13 so take this with a grain of salt.
Any properly perfected claims against the estate(which are not subject to avoidance either through LAM or preference) will count towards the secured debt limit. Ex. Even though the first trust deed is "discharged" as to the Debtor in a Chapter 7, the in rem claim remains and will be counted towards the debt limit. Any cars etc. also count.
Assume home is worth 800k, the first is 900k and the second is 600k the Chapter 20 is ok because the 600k will be stripped off (and not be a claim against the estate at all) and the secured portion (900k + misc secured claims) is under the debt limit. This also assumes there are no nondischargeable unsecured debts that survive the 7.
You should give many disclaimers too like some judges may still not allow for Chapter 20s even though most do. Like Dennis McGoldrick (I believe it was him) said, there is a case in front of the 9th circuit where Debtor filed for a Chapter 13 the day after she received a Chapter 7 discharge with the sole purpose being to get rid of the 2nd. I'd imagine this case could overturn Chapter 20s and undo the confirmed plans and/or could keep you from confirming your plan if a holding comes out during the process. So be careful.
Sincerely,
Michael Avanesian
Law Offices of David A. Tilem
http://www.tilemlaw.com/
818-507-6000
On Wed, Oct 30, 2013 at 7:12 PM, Christian Cooper wrote:
>
>I have a potential client who is considering bankruptcy to cure mortgage arrears and eliminate (dischargeable) unsecured debt. The problem is, due to a large first and second mortgage, he is over the Chapter 13 secured debt limit, and he may also be over the unsecured debt limit.
>
>
>
>My first thought was that he would need to consider an individual Chapter 11 (which I don't do). But then I thought he could potentially do a Chapter 20, assuming he qualifies for Chapter 7.
>
>
>It seems that a Chapter 7 discharge might solve theunsecured debt limit problem in a subsequent Chapter 13. But...would the mortgage debtsent Chapter 13?
>
>
>If not, is there any other reason he couldn't do a Chapter 20? Is there a better approach?
>
>
>Thanks,
>Christian
The post was migrated from Yahoo.
It's quite complicated and I've never done a 7 or 13 so take this with a
grain of salt.
Any properly perfected claims against the *estate *(which are not subject
to avoidance either through LAM or preference) will count towards the
secured debt limit. Ex. Even though the first trust deed is "discharged" as
to the Debtor in a Chapter 7, the in rem claim remains and will be counted
towards the debt limit. Any cars etc. also count.
Assume home is worth 800k, the first is 900k and the second is 600k the
Chapter 20 is ok because the 600k will be stripped off (and not be a claim
against the estate at all) and the secured portion (900k + misc secured
claims) is under the debt limit. This also assumes there are no
nondischargeable unsecured debts that survive the 7.
You should give many disclaimers too like some judges may still not allow
for Chapter 20s even though most do. Like Dennis McGoldrick (I believe it
was him) said, there is a case in front of the 9th circuit where Debtor
filed for a Chapter 13 the day after she received a Chapter 7 discharge
with the sole purpose being to get rid of the 2nd. I'd imagine this case
could overturn Chapter 20s and undo the confirmed plans and/or could keep
you from confirming your plan if a holding comes out during the process. So
be careful.
Sincerely,
Michael Avanesian
Law Offices of David A. Tilem
www.tilemlaw.com
818-507-6000
On Wed, Oct 30, 2013 at 7:12 PM, Christian Cooper wrote:
> **
>
>
> I have a potential client who is considering bankruptcy to cure mortgage
> arrears and eliminate (dischargeable) unsecured debt. The problem is, due
> to a large first and second mortgage, he is over the Chapter 13 secured
> debt limit, and he may also be over the unsecured debt limit.
>
> My first thought was that he would need to consider an individual Chapter
> 11 (which I don't do). But then I thought he could potentially do a Chapter
> 20, assuming he qualifies for Chapter 7.
>
> It seems that a Chapter 7 discharge might solve the unsecured debt limit
> problem in a subsequent Chapter 13. But...would the mortgage debts discharged
> in Chapter 7 count toward the secured debt limit in a subsequent Chapter
> 13?
>
> If not, is there any other reason he couldn't do a Chapter 20? Is there a
> better approach?
>
> Thanks,
> Christian
>
>
>
The post was migrated from Yahoo.
I have a potential client who is considering bankruptcy to cure mortgage arrears and eliminate (dischargeable) unsecured debt. The problem is, due to a large first and second mortgage, he is over the Chapter 13 secured debt limit, and he may also be over the unsecured debt limit.
My first thought was that he would need to consider an individual Chapter 11 (which I don't do). But then I thought he could potentially do a Chapter 20, assuming he qualifies for Chapter 7.
It seems that a Chapter 7 discharge might solve theunsecured debt limit problem in a subsequent Chapter 13. But...would the mortgage debtsdischarged in Chapter 7 count toward the secured debt limit in a subsequent Chapter 13?
If not, is there any other reason he couldn't do a Chapter 20? Is there a better approach?
Thanks,
Christian
The post was migrated from Yahoo.