Debtor Not Balance Sheet Insolvent-- All equity locked
Posted: Wed Feb 11, 2015 2:02 pm
You need an AP under FRBP 7001(3):
"(3) a proceeding to obtain approval under 363(h) for the sale of both the
interest of the estate and of a co-owner in property;"
I am curious to know whether 363(h) applies to this situation considering
that the father-in-law is a co-owner in name only. If anything he is a
co-Trustee of a "resulting trust" and owes fiduciary duties to Steven's
client. Is there a mechanism and/or is it appropriate to file a 363 sale
motion as if there was no co-owner where the motion explained the
circumstances, that a third party may interject and claim to be a co-owner,
at which time the motion would be converted to an AP?
Sincerely,
*Michael Avanesian, Esq. *AVANESIAN LAW FIRM
101 N. Brand Blvd., PH 1920
Glendale, California 91203
Tel: 818.276.2477 Fax: 818.208.4550
*Confidentiality**: *This electronic transmission and its contents are
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On Wed, Feb 11, 2015 at 1:40 PM, Kirk Brennan kirkinhermosa@gmail.com
[cdcbaa] wrote:
>
>
> I believe Frank is right that you need an adversary proceeding.
> On Feb 11, 2015 12:41 PM, "'Frank X. Ruggier' frank@ruggierlaw.com
> [cdcbaa]" wrote:
>
>>
>>
>> While Section 363(h) would allow sale of the property (assuming
>> applicable in chapter 13), the co-owners / joint tenants interest would
>> attach to the sale proceeds and I believe that you would need an adversary
>> proceeding to determine how much the joint tenant would be owed. I could
>> be wrong (and maybe it depends on the judge) but if the property interest
>> is disputed, I thought that it required an adversary proceeding. If you
>> need both 363 motion AND adversary proceeding, not sure there is much
>> benefit to bankruptcy as opposed to state court quiet title / settlement.
>> Something to possibly keep in mind before filing.
>>
>>
>>
>> Good luck.
>>
>>
>>
>> Frank
>>
>>
>>
>> Frank X. Ruggier
>> Attorney at Law
>> 15760 Ventura Blvd., Suite 880
>> Encino, CA 91436
>> Tel: (818) 796-3529
>>
>>
>>
>> *From:* cdcbaa@yahoogroups.com [mailto:cdcbaa@yahoogroups.com]
>> *Sent:* Wednesday, February 11, 2015 12:27 PM
>> *To:* cdcbaa@yahoogroups.com
>> *Subject:* RE: [cdcbaa] Debtor Not Balance Sheet Insolvent-- All equity
>> locked in rental house
>>
>>
>>
>>
>>
>> Frank:
>>
>>
>>
>> Co-owner doesnt speak English and is the father of the brother-in-law
>> who will be kicked out of the house, so no likely cooperation there.
>> Co-owner, as far as we know, never put a dime in the house, although if he
>> did help out his son to pay the mortgage he should be repaid similar to a
>> Moore/Marsden analysis.
>>
>>
>>
>> I was going to use the 11 U.S.C. 363 to litigate, which is far easier
>> than an adversary or state court action. I suppose I could do a quiet
>> title and partition in state court, but that would be a huge expense
>> compared to a 363 motion. Im still not sure I can use subsection (h) and
>> will research that.
>>
>>
>>
>> Thank you
>>
>>
>>
>> Steve
>>
>> *From:* cdcbaa@yahoogroups.com [mailto:cdcbaa@yahoogroups.com
>> ]
>> *Sent:* Wednesday, February 11, 2015 11:24 AM
>> *To:* cdcbaa@yahoogroups.com
>> *Subject:* RE: [cdcbaa] Debtor Not Balance Sheet Insolvent-- All equity
>> locked in rental house
>>
>>
>>
>>
>>
>> Am I missing something? There is a co-owner joint tenant that you don>> believe will be willing to sell the property voluntarily, correct?
>>
>>
>>
>> What are your plans with respect to the co-owner? Are you going to
>> litigate with co-owner in bankruptcy court that co-owner has no equitable
>> interest in the property or are you going to pay the co-owner his/her 50%
>> share? If litigating, maybe better to litigate outside of bankruptcy and
>> avoid bankruptcy all together. If paying co-owner 50%, wouldnt co-owner
>> be willing to sell voluntarily for that 50% proceeds? Maybe approach the
>> co-owner and pay him/her off to cooperate with voluntary sale (costs of
>> quiet title litigation settlement).
>>
>>
>>
>> Frank X. Ruggier
>> Attorney at Law
>> 15760 Ventura Blvd., Suite 880
>> Encino, CA 91436
>> Tel: (818) 796-3529
>>
>>
>>
>> *From:* cdcbaa@yahoogroups.com [mailto:cdcbaa@yahoogroups.com
>> ]
>> *Sent:* Tuesday, February 10, 2015 5:30 PM
>> *To:* cdcbaa@yahoogroups.com
>> *Subject:* RE: [cdcbaa] Debtor Not Balance Sheet Insolvent-- All equity
>> locked in rental house
>>
>>
>>
>>
>>
>> So youre saying that since (h) says notwithstanding>> subsection (f) that it only essentially explains the powers under (f) and
>> is not a separate section and so we could still use (h). I like that
>> interpretation. Thank you. I will do some case research of course and let
>> you know.
>>
>>
>>
>> *From:* cdcbaa@yahoogroups.com [mailto:cdcbaa@yahoogroups.com
>> ]
>> *Sent:* Tuesday, February 10, 2015 5:02 PM
>> *To:* CDCBAA List Serve
>> *Subject:* Re: [cdcbaa] Debtor Not Balance Sheet Insolvent-- All equity
>> locked in rental house
>>
>>
>>
>>
>>
>> I really doubt anyone will bring up that issue considering what you
>> intend to do; however, I believe that subsection (h) was omitted because it
>> is an exception to subsection (f) and incorporated automatically.
>>
>>
>>
>> Otherwise we would have some weird results like a sale through Chapter 13
>> could not have a finding of a good faith purchase (subsection (m)) and the
>> debtor would be powerless to stop collusion at a sale through subsection
>> (n) and whatever protections congress intended to extend to consumers
>> through subsection (o) would apply to sales under Chapter 7 but not 13.
>>
>>
>>
>> Unless there is a case on point, based on the rationale I just presented,
>> I would be comfortable going through with the sale where I tried to use
>> subsection (h). I would certainly advise my client that the concerns you
>> have could come up. Considering the 9th Circuit BAP has allowed Chapter 13
>> Debtors to use Trustee avoidance powers, I think you have a lot of policy
>> arguments to fight any opposition as well.
>>
>>
>>
>>
>> Sincerely,
>>
>>
>>
>>
>> *Michael Avanesian, Esq. *AVANESIAN LAW FIRM
>> 101 N. Brand Blvd., PH 1920
>> Glendale, California 91203
>> Tel: 818.276.2477 Fax: 818.208.4550
>>
>>
>>
>> *Confidentiality**: *This electronic transmission and its contents are
>> legally privileged and confidential information and intended solely for the
>> use of the addressee. If the reader of this message is not the intended
>> recipient, you are hereby notified that any dissemination, distribution,
>> copying or other use of this message and its contents is strictly
>> prohibited. If you have received this transmission in error, please reply
>> to us immediately and delete this message from your directory.
>>
>> *IRS Circular 230 Disclosure:* To ensure compliance with requirements
>> imposed by the IRS, please be advised that any U.S. federal tax advice
>> contained in this communication (including any attachments) is not intended
>> or written to be used or relied upon, and cannot be used or relied upon,
>> for the purpose of (i) avoiding penalties under the Internal Revenue Code,
>> or (ii) promoting, marketing or recommending to another party any
>> transaction or matter addressed herein.
>>
>>
>>
>> On Tue, Feb 10, 2015 at 2:42 PM, 'Steven B. Lever' sblever@leverlaw.com
>> [cdcbaa] wrote:
>>
>>
>>
>> Michael:
>>
>>
>>
>> You bring up an interesting point under 11 U.S.C. 1303. It reads as
>> below.
>>
>>
>>
>> Subject to any limitations on a trustee under this chapter, the debtor
>> shall have, exclusive of the trustee, the rights and powers of a trustee
>> under sections 363 (b)
>>
>> , 363 (d)
>>
>> , 363 (e)
>>
>> , 363 (f)
>> ,
>> and 363 (l)
>> ,
>> of this title.
>>
>>
>>
>> Subsection (f) allows the sale, but it does not list subsection (h) which
>> states:
>>
>> *(h)* Notwithstanding subsection (f) of this section, the trustee may
>> sell both the estates interest, under subsection (b) or (c) of this
>> section, and the interest of any co-owner in property in which the debtor
>> had, at the time of the commencement of the case, an undivided interest as
>> a tenant in common, joint tenant, or tenant by the entirety, only if>>
>>
>>
>> So Im not sure that I can sell the co-owners interest. That may only
>> be the prerogative of a Chapter 7 Trustee.
>>
>>
>>
>> Steve
>>
>>
>>
>> *From:* cdcbaa@yahoogroups.com [mailto:cdcbaa@yahoogroups.com]
>> *Sent:* Tuesday, February 10, 2015 12:16 AM
>> *To:* CDCBAA List Serve
>> *Subject:* Re: [cdcbaa] Debtor Not Balance Sheet Insolvent-- All equity
>> locked in rental house
>>
>>
>>
>>
>>
>> Remember I don't do Chapter 13s so there may be nuanced Chapter 13
>> practice issues I don't know about.
>>
>>
>>
>> Section 1303 authorizes the Debtor to conduct 363 sales. 1322(b)(8)
>> allows payment of creditors other than through the Trustee. Your plan
>> should pay all creditors through escrow and not funnel money through the
>> Chapter 13 Trustee. Alternatively, it can make the debtor or you the
>> disbursing agent and have you/debtor disburse the funds.
>>
>>
>>
>> I have not researched this in depth in the 9th Circuit but the old rule
>> was Chapter 13 Trustees were compensated for payments they didn't make
>> themselves subject to Court oversight but that was statutorily changed so
>> that they are compensated for funds actually disbursed based on a set
>> percentage.
>>
>>
>>
>> So I believe you can do the sale, pay the creditors directly and pay the
>> Chapter 13 Trustee very little, if anything.
>>
>>
>>
>>
>> Sincerely,
>>
>>
>>
>>
>> *Michael Avanesian, Esq. *AVANESIAN LAW FIRM
>> 101 N. Brand Blvd., PH 1920
>> Glendale, California 91203
>> Tel: 818.276.2477 Fax: 818.208.4550
>>
>>
>>
>> *Confidentiality**: *This electronic transmission and its contents are
>> legally privileged and confidential information and intended solely for the
>> use of the addressee. If the reader of this message is not the intended
>> recipient, you are hereby notified that any dissemination, distribution,
>> copying or other use of this message and its contents is strictly
>> prohibited. If you have received this transmission in error, please reply
>> to us immediately and delete this message from your directory.
>>
>> *IRS Circular 230 Disclosure:* To ensure compliance with requirements
>> imposed by the IRS, please be advised that any U.S. federal tax advice
>> contained in this communication (including any attachments) is not intended
>> or written to be used or relied upon, and cannot be used or relied upon,
>> for the purpose of (i) avoiding penalties under the Internal Revenue Code,
>> or (ii) promoting, marketing or recommending to another party any
>> transaction or matter addressed herein.
>>
>>
>>
>> On Mon, Feb 9, 2015 at 7:14 PM, 'Steven B. Lever' sblever@leverlaw.com
>> [cdcbaa] wrote:
>>
>>
>>
>> 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 dont speak because>> Long story short, she wants to sell the house to pay her creditors 100% and
>> get out of her credit card purgatory. Theres $50K of credit card debt and
>> $130,000 of realizable equity in the property.
>>
>>
>>
>> She wouldnt even need to file bankruptcy if it were that simple. Its
>> not. She is joint tenants with her brother in laws 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 doesnt even know him and doubts hell 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. Debtors 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.
>>
>>
>>
>> Ive never seen it done though, although Ive done many 11 U.S.C. 363
>> motions in both chapters. Im assuming a judges 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 debtors 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 Im forgetting about? Ive always thought a debtor could
>> exercise the Chapter 13 Trustee powers, and subpart J would be exercised on
>> the 13 Trustees behalf.
>>
>>
>>
>> And wouldnt the Trustees 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
>>
>>
>>
>>
>>
>>
>>
>>
>
You need an AP under FRBP 7001(3):"(3) a proceeding to obtain approval under 363(h) for the sale of both the interest of the estate and of a co-owner in property;"I am curious to know whether 363(h) applies to this situation considering that the father-in-law is a co-owner in name only. If anything he is a co-Trustee of a "resulting trust" and owes fiduciary duties to Steven's client. Is there a mechanism and/or is it appropriate to file a 363 sale motion as if there was no co-owner where the motion explained the circumstances, that a third party may interject and claim to be a co-owner, at which time the motion would be converted to an AP?Sincerely,Michael Avanesian, Esq.AVANESIAN
LAW FIRM101
N. Brand Blvd., PH 1920Glendale,
California 91203Tel:
818.276.2477 Fax: 818.208.4550Confidentiality:This electronic transmission and its contents are legally privileged and confidential information and intended solely for the use of the addressee. If the reader of this message is not the intended recipient, you are hereby notified that any dissemination, distribution, copying or other use of this message and its contents is strictly prohibited. If you have received this transmission in error, please reply to us immediately and delete this message from your directory.IRS Circular 230 Disclosure:To ensure compliance with requirements imposed by the IRS, please be advised that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used or relied upon, and cannot be used or relied upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
On Wed, Feb 11, 2015 at 1:40 PM, Kirk Brennan kirkinhermosa@gmail.com [cdcbaa] <cdcbaa@yahoogroups.com> wrote:
The post was migrated from Yahoo.