How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Terry L. Your Own Question
Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2901
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
15345323
Type Your Bankruptcy Law Question Here...
Terry L. is online now
A new question is answered every 9 seconds

on a chapter 13, can one sell his home to a family member but

Customer Question

on a chapter 13, can one sell his home to a family member but remain in house as a renter, with maybe some payment relief ? my father is currently in a 13, but has recently gotten married. the bankruptcy and the house is only in his name, i was approached to refi the house in my name and turn him into a renter. we want to do this only to keep his property in the family in the event of his death.
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 5 years ago.

Terry L. :

Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here.

Terry L. :

All sales would be subject to court approval.

Terry L. :

So, first, the sale must be for fair market value

Customer:

fair market value would raise his payment

Customer:

is expert still typing

Terry L. :

yes one moment

Terry L. :

Thank you

Terry L. :

if sold for FMV, that is fine

Terry L. :

The debtor can then rent from the family member sure.

Terry L. :

if there is a change in the budget, then the ch13 plan repayment can be modified accordingly, especially if taking arrears out of the plan etc.

Terry L. :

Do you have any questions?

Customer:

buying the property for fmv may be problem. to me it does not seem fair, the difference between loan payoff and fmv would go towards chapter 13 balance correct

Terry L. :

most of the time, correct

Terry L. :

The debtor can ask to keep the exempt funds though.

Terry L. :

if there is a homestead exemption

Customer:

he is making full payment direct to the lender and making trustee payments on everything else, so i dont see why the proceeds from homestead would go pay revolving debt etc.

Terry L. :

Because the case is designed to pay back enough debts to cover unexempt assets. When those unexempt assets are liquidated, the proceeds go to the creditors as adequate protection under the code. Unfortunately, it's just the way it is. If the debtor is paying 100% of the unsecured debts, then the debtor might be able to keep the proceeds, if asked on the motion to sell.

Customer:

so he couldnt pay it off either then, i supplied the money.

Terry L. :

the mortgage or the bankruptcy?

Customer:

the mortgage

Terry L. :

You can pay it off, sure

Terry L. :

refinancing is subject to court approval too

Customer:

how would that affect the 13

Terry L. :

Usually nothing, unless the payment changes.

Terry L. :

if the mortgage payment decreases, the trustee could ask for a bump up in the bankruptcy payment

Terry L. :

if it goes up, the debtor can modify the plan too

Customer:

ok you have shed some light, let me get with the lawyer, thanks bro

Terry L. and other Bankruptcy Law Specialists are ready to help you