Business Property for rental makes this nonconsumer case
Posted: Fri Aug 08, 2014 8:40 pm
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
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> http://www.irs.gov/pub/irs-wd/1005029.pdf (was this cited to earlier?)
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> The above two links support the conclusion that postpetition interest continues to accumulate on nondischargeable debt and the debtor is liable for such interest.
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> 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:
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>> 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.
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The post was migrated from Yahoo.