Settlement of 2nd mortgage with Chapter 7 pending
Posted: Tue Dec 29, 2009 10:45 pm
Not a stay violation for 7 debtor to borrow money. They do not borrow for the estate, they were not trustees. Debts prior to conversion are debts in coverted Case. 349
D
Sent from my iPhone
On Dec 29, 2009, at 6:53 PM, "clifford_bordeaux" wrote:
What other information is needed?
Based on further research, it looks like the loan from the parents should not be considered property of the estate, since the loan was made to the clients post-petition (and it was in fact a loan--not a gift or inheritance). So these funds should not be subject to trustee avoidance or "clawback" for the benefit of other creditors.
The next issue is whether borrowers were within their rights to use the proceeds of their loan from their parents to settle their second mortgage. Since the money was not property of the estate, I don't see why court approval would be required--seems to me that this is analogous to a debtor simply borrowing money from parents post-petition in order to make a regular mortgage payment (even though in this case they were able to settle the debt in full). I guess it could technically be a stay violation if the creditor demanded the settlement, but in this case the debtors initiated the settlement discussions and were happy with the result.
Am I missing something?
>
> not enough information to answer your question.
>
>
> David A. Tilem
> Certified Bankruptcy Specialist*
> Law Offices of David A. Tilem (a debt relief agency)
> 206 N. Jackson Street, #201, Glendale, CA 91206
> Tel: 818-507-6000 Fax: 818-507-6800
>
> * Bankruptcy specialist cert. by State Bar of CA Bd of Legal
> Specialization.
> Business bankruptcy specialist cert. by Amer. Bd. of Certification
>
>
> -----Original Message-----
> clifford_bordeaux
> Sent: Tuesday, December 29, 2009 2:46 PM
> To: cdcbaa@yahoogroups.com
> Subject: [cdcbaa] Settlement of 2nd mortgage with Chapter 7 pending
>
>
>
>
> Clients filed Chapter 7 in August. Shortly thereafter, borrowed $10K from
> parents to settle a second mortgage of more than $100K. Deed of Reconveyance
> was recorded in September.
>
> Later, UST filed a 707b motion for unrelated reasons and clients stipulated
> to a conversion to Chapter 13. I am planning to report the $10K loan from
> parents as a new unsecured debt and disclose that 2nd was paid off. Is there
> any problem with any of this? If this was a stay violation, do I need to
> file a motion to try to ratify the arrangement? I am not sure if the clients
> ever had physical possession of the money, or if parents obtained a
> cashier's check to settle with the 2nd directly.
>
Not a stay violation for 7 debtor to borrow money. They do not borrow for the estate, they were not trustees. Debts prior to conversion are debts in coverted Case. 349 DSent from my iPhoneOn Dec 29, 2009, at 6:53 PM, "clifford_bordeaux" <cliff@bordeauxlaw.com> wrote:
What other information is needed?
Based on further research, it looks like the loan from the parents should not be considered property of the estate, since the loan was made to the clients post-petition (and it was in fact a loan--not a gift or inheritance). So these funds should not be subject to trustee avoidance or "clawback" for the benefit of other creditors.
The next issue is whether borrowers were within their rights to use the proceeds of their loan from their parents to settle their second mortgage. Since the money was not property of the estate, I don't see why court approval would be required--seems to me that this is analogous to a debtor simply borrowing money from parents post-petition in order to make a regular mortgage payment (even though in this case they were able to settle the debt in full). I guess it could technically be a stay violation if the creditor demanded the settlement, but in this case the debtors initiated the settlement discussions and were happy with the result.
Am I missing something?
com, "David A. Tilem" <DavidTilem@...> wrote:
>
> not enough information to answer your question.
>
>
> David A. Tilem
> Certified Bankruptcy Specialist*
> Law Offices of David A. Tilem (a debt relief agency)
> 206 N. Jackson Street, #201, Glendale, CA 91206
> Tel: 818-507-6000 Fax: 818-507-6800
>
> * Bankruptcy specialist cert. by State Bar of CA Bd of Legal
> Specialization.
> Business bankruptcy specialist cert. by Amer. Bd. of Certification
>
>
> -----Original Message-----
wbr>com [mailto:cdcbaa@yahoogroups.com] On Behalf Of
> clifford_bordeaux
> Sent: Tuesday, December 29, 2009 2:46 PM
> To: cdcbaa@yahoogroups.com
> Subject: [cdcbaa] Settlement of 2nd mortgage with Chapter 7 pending
>
>
>
>
> Clients filed Chapter 7 in August. Shortly thereafter, borrowed $10K from
> parents to settle a second mortgage of more than $100K. Deed of Reconveyance
> was recorded in September.
>
> Later, UST filed a 707b motion for unrelated reasons and clients stipulated
> to a conversion to Chapter 13. I am planning to report the $10K loan from
> parents as a new unsecured debt and disclose that 2nd was paid off. Is there
> any problem with any of this? If this was a stay violation, do I need to
> file a motion to try to ratify the arrangement? I am not sure if the clients
> ever had physical possession of the money, or if parents obtained a
> cashier's check to settle with the 2nd directly.
>
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