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Ellen
Ellen, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36714
Experience:  Bankruptcy Lawyer. Experienced.
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My fiance is in bankruptcy. She was allowed to pay for her

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My fiance is in bankruptcy. She was allowed to pay for her house outside of the bankruptcy payments. We now need to sell her house. There is a $15K deficit between what the house is worth and what she still owes on it. If we short sell will we be responsible for the deficit? What if we just let it go into forclosure?

FiveStarLaw :

*This chat is not intended as legal advice. It is general information that may or may not apply to your situation and should not be relied upon.*

FiveStarLaw :

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FiveStarLaw :

Did your fiancé file a chapter 7 or a chapter 13 bankruptcy?

Customer: Chapter 13.
FiveStarLaw :

If your fiancée short sells the house, the $15,000 deficit would be considered an unsecured debt that would need to be paid through the chapter 13 plan.

FiveStarLaw :

Court permission would be required to sell the house

FiveStarLaw :

I would be glad to respond to any related follow-up questions that you may have.

Customer:

I'm sorry I didn't get the original answer.

FiveStarLaw :


If your fiancée short sells the house, the $15,000 deficit would be considered an unsecured debt that would need to be paid through the chapter 13 plan.







Court permission would be required to sell the house






FiveStarLaw :

Does this make sense to you?

Customer:

I can't scroll up on our chat to find the answer. Is the information saved somewhere on the site?

FiveStarLaw :

Let me switch to the Q&A format and my answer will be sent to your e-mail

I hope that you are now better able to read my answer.

 

If your fiancée short sells the house, the $15,000 deficit would be considered an unsecured debt that would need to be paid through the chapter 13 plan.

 

Court permission would be required to sell the house

 

I would be glad to respond to any related follow-up questions that you may have.

I hope that you are now better able to read my answer.

If your fiancée short sells the house, the $15,000 deficit would be considered an unsecured debt that would need to be paid through the chapterXXXXXpermission would be required to sell the house

I would be glad to respond to any related follow-up questions that you may have.
Customer: replied 4 years ago.

And how would it work with being required to pay the deficit? Would our payments go up or be extended longer than the 5 year period to pay the extra debt?


A chapter 13 bankruptcy cannot be extended longer than the five-year period. Your payments to the unsecured creditors could increase - whether the payments would increase would depend upon your actual current plan and income.

You may want to consider converting to a chapter 7 bankruptcy if your fiancée qualifies – this would discharge the unsecured debt including the deficiency on the mortgage
Customer: replied 4 years ago.
She did not qualify for that when she applied. If we allowed the house to go into foreclosure the payments could only increase to a certain proportion of her income correct?
Yes – that is correct. You may want to have your attorney reevaluate to determine if she now qualifies for a 7
Ellen and other Bankruptcy Law Specialists are ready to help you
Customer: replied 4 years ago.
In her chapter 13 she is paying back 100% to creditors. We need to short sale or foreclose on our current home running the risk of adding to our chapter 13. Is it legal to borrow against a 401k plan while in chapter 13 to pay off the bankruptcy?

Yes it is legal provided she first obtains court approval. It is typically not advisable as a 401(k) is usually exempt from the claims of creditors. My best advice is to meet with a local attorney – either your current attorney or a new attorney – to see if your fiancé now qualifies for a chapter 7