I have a new potential case that is a little messy. The Debtor is not balance sheet insolvent, only cash flow insolvent. Her only asset is a house she rents to her sister. They don't speak because...well, never mind. Long story short, she wants to sell the house to pay her creditors 100% and get out of her credit card purgatory. There's $50K of credit card debt and $130,000 of realizable equity in the property.
She wouldn't even need to file bankruptcy if it were that simple. It's not. She is joint tenants with her brother in law's father because at the last moment they told her that her income was insufficient and she needed someone else on the title to qualify as to income. Other title holder put no money down. He may have made a few of the mortgage payments, but that is all. She doesn't even know him and doubts he'll agree to sell.
So put her in Chapter 7, the Chapter 7 Trustee will have no trouble selling the house. However, Chapter 7 Trustee gets statutory fees on even the mortgage payment, and will undoubtedly hire a big law firm to do the sale and charge megabucks to do the legal work. Debtor's equity over the $50,000 owed to creditors of $80,000 will be severely depleted at the end of the process. A very expensive way to pay creditors.
Chapter 13, however, allows me to control the expenses on the legal fees and no Chapter 7 statutory fees.
I've never seen it done though, although I've done many 11 U.S.C. 363 motions in both chapters. I'm assuming a judge's signature with valid notice to all parties would be the same as if a Chapter 7 Trustee requested the sale.
(j) After a sale of property to which subsection (g) or (h) of this section applies, the trustee shall distribute to the debtor's spouse or the co-owners of such property, as the case may be, and to the estate, the proceeds of such sale, less the costs and expenses, not including any compensation of the trustee, of such sale, according to the interests of such spouse or co-owners, and of the estate.
Does anyone see any problems with doing this liquidation involving the other title holder in a Chapter 7 case? Is there any special Chapter 7 Trustee power I'm forgetting about? I've always thought a debtor could exercise the Chapter 13 Trustee powers, and subpart J would be exercised on the 13 Trustee's behalf.
And wouldn't the Trustee's 11% only go to paying the $50,000 of credit card debt, and not the mortgage paid through escrow?
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.