Legal Question in Bankruptcy in California

Chap 13, Divorce, Sale of Home

We filed Chap 13 May 1999, balance owed approx $8100.00. We are going to be filing a divorce & want to sell our home. Home has approx $150,000.00 equity.

Questions:

1. We were told the Chap 13 could be paid in full when we filed. We now understand a new law was passed Aug 1, 2000, that will not allow us to pay before the plan is over 3 years, our plan is 60 months. We were never notified of this law and will it apply to us or can we pay off the Chap 13?

2a. If we do sell our home will trustee take proceeds from sale of home to pay original debt we filed Chap 13 on? [approx. $100,000.00]

2b. Would we be able to negotiate the amount paid back to the creditors or would we have to pay the full amount back [$100,000.00]

3. Can we lease the property until the plan is paid in full to avoid losing the equity?

4. How will a divorce effect the Chap 13? Will we be able to continue to pay the plan payments and rent the home?

Our attorney of record can't answer the above questions for us. What can we do about that?

Thank you for your time.

DR


Asked on 10/29/00, 2:00 pm

1 Answer from Attorneys
Mark Markus Law Office of Mark J. Markus

Re: Chap 13, Divorce, Sale of Home

Well, first of all I haven't heard of any such law. It is ultimately up to the judge in your case as to whether you can pre-pay a Plan. Some judges allow it, some don't; there are arguments on both sides. If your house has $150,000 of equity, I'm assuming that your plan is a 100% plan (depending on what your homestead exemption taken in your bankruptcy papers was), so it shouldn't make any difference when you pay your plan. If you'd like to e-mail me the statute or case that you think has changed the law, I will be happy to take a look at it and give you my opinion.

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Answered on 11/16/00, 12:40 am


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