Portland Bankruptcy Attorney

Bankruptcy Lawyer Portland Or

Portland Bankruptcy Attorney
CALL 503-380-7822
email-iconmap-marker
  • Home
  • Bankruptcy
    • Personal Bankruptcy
    • Business Bankruptcy
    • Zero Down Bankruptcy
    • Foreclosure
    • Chapter 7 Bankruptcy
    • Chapter 13 Bankruptcy
  • Estate Planning
  • About
  • Contact

Chapter 7 and Chapter 13–Selling Your Home in the Near Future and Protecting Its Increased Equity

October 30, 2015 by Chris Kane

Have the flexibility to sell your home when you want, giving time for it to add equity, while keeping creditors away from that equity. 

 

 

If you are feeling overwhelmed by debts and wondering if you should file bankruptcy, and if in the midst of this you own a home, you might also be wondering whether you should be selling it. Let’s assume that you’d rather not sell right now, because it’s not the right time for personal or family reasons. Or maybe the home doesn’t have much equity now but its value is increasing and so you think it will likely have significantly more equity two, three years from now.

But the problem is that you have creditors threatening to sue you, get judgments and put liens on your home, eating up any equity that’s there now and any future equity as well. How can bankruptcy help here?

The Chapter 7 Solution

Our last blog post was about the advantages under Chapter 7 “straight bankruptcy” if you currently have some equity in your home but no more than is protected by the homestead exemption. Assuming you were current or close to current on the home’s mortgage(s), you could keep your home and its equity would be protected from your creditors. Pending lawsuits would be stopped and future ones would be prevented, avoiding judgment liens against your home. Judgment liens that were already on your home would likely be removed. All that would happen within about 3 or 4 months after your Chapter 7 case was filed. Then you could sell your home immediately afterwards, or later if you wanted to wait for a better time or after the home’s value increased.

When Chapter 7 Doesn’t Help Enough

But what if you are way behind on your home’s mortgage(s), on its property taxes, or homeowners’ association fees? Or what if you have debts that would not be discharged (written off) in a Chapter 7 case, such as recent income taxes, back child or spousal support, or student loans?

In these situations Chapter 7 doesn’t help enough. Having a little equity in your home doesn’t help if you are behind on the mortgage, property taxes, or homeowners’ association fees, all of which could result in your home being foreclosed out from under you. And debts that aren’t discharged could become liens against your home after the Chapter 7 case is over, sometimes giving their creditors the ability to foreclose, and at least their liens eat up your equity.

The Chapter 13 Solution

These two sets of problems are both solved by instead filing a Chapter 13 “adjustment of debts,” allowing you to protect your home’s present and anticipated equity.

First, if you are behind on a mortgage, property tax, or homeowners’ association obligation, filing a Chapter 13 case will prevent the creditor from taking action against you and your home while giving your 3 to 5 years to catch up on that mortgage, tax, and/or obligation. Under certain circumstances you’d get significant advantages, such as being able to “strip” your second (or third) mortgage so that you would no longer need to make the monthly payment and could write off most of the balance, setting your home up for future building of equity. Or you could “avoid” judgment liens—remove them from your home’s title—freeing up equity that they were tying up.

Second, if you owe debts that can’t be discharged in a Chapter 7 case, such as income taxes or support arrearage, in most situations those types of creditors would be stopped from taking any collection action against you while you paid the obligation, again over 3 to 5 years, through payments that fit your budget. You would get various breaks with many of these kinds of debts. For example, with income taxes, usually no future interest and penalties would accrue once you filed your Chapter 13 case, reducing the total you’d need to pay. Income tax liens on your home would be resolved in beneficial ways, minimizing what you’d need to pay on them before they were released from your home’s title.

Selling When You Want

Chapter 13 often gives you tremendous flexibility about the timing of the sale of your home.

When you file a Chapter 13 case or very shortly thereafter, you and your attorney put together a formal payment plan, laying out your intentions with all your creditors. That plan goes through a bankruptcy court approval process, with limited opportunities for creditors to object. If you are intending to sell your home during the 3-to-5-year length of the Chapter 13 plan, you could state in your plan when you intend to do so, what creditors you would pay when that happens, and then what the rest of your payment plan would look like afterwards up to the completion of your case.

This allows you to, in the right circumstances, to hold off paying some creditors until when you sell your home. Holding off selling the home could well give you more equity to work with when you do sell. You could also have more equity then because of removing certain liens on the home as mentioned above.

Or if you are just considering selling your home down the line and are not yet sure about it, you would not necessarily say anything about that in your Chapter 13 plan. Instead you would put together a payment plan assuming that you’d keep your home, giving you time for your personal/family/employment situations to play out, as well as to see whether your home value increases.

Then you could decide a couple years into your Chapter 13 case to amend your payment plan and sell your home, if that is in your best interest. You may be able to complete your case with the sale or else finish off the case after you sell.

Or instead you could wait until the completion of your case and sell at any point afterwards.

Or finally at any point during your Chapter 13 case you could convert it into a Chapter 7 case and sell your home a few months later as soon as that was finished.

We’ll talk about these delayed selling options in our next blog post in a couple days. But you can see how Chapter 13 can be a tremendously flexible way to keep your creditors at bay while you address your obligations in a manageable way, and while keeping open your options for selling your home.

 

Filed Under: Chapter 13, Chapter 7, Real Estate Tagged With: avoiding judgment liens, home equity, home mortgage, home sale, second mortgage, stripping liens

Welcome to the Portland Bankruptcy Law Blog

I'd like to help you overcome your financial problems. One good way to start is to provide you with accurate and timely information about the bankruptcy laws. I do that here through informative blog posts, with a new one published here every week. I've been doing this for years so there is a wealth of information for you here.

But please be aware that since you are unique person you need a highly personalized solution to your challenges. That requires the analysis and advice of a conscientious and highly experienced attorney. That's really the only sensible way to get the benefit of the many powerful and effective remedies that the law provides.

So I hope the information provided here is helpful to you. Please contact me for guidance to a much better place:

503-380-7822

Recent Posts

  • No link found between bankruptcy and employment prospects
  • Creditor found in violation of automatic bankruptcy stay
  • What are the short- and long-term credit impacts of bankruptcy?
  • Bankruptcy Attorney Portland, Or | Bankruptcy Lawyer Oregon | Christopher J. Kane P.C.

Categories of Blog Posts

  • Portland Bankruptcy Attorney
  • Personal Bankruptcy
  • Business Bankruptcy
  • Stop Foreclosure
  • Chapter 7 Bankruptcy
  • Chapter 13 Bankruptcy
  • Zero Down Bankruptcy
  • Filing Bankruptcy in Oregon
  • Testimonials
  • FAQ
  • Blog

FREE CONSULTATION

GET A FREE CONFIDENTIAL CONSULTATION THIS MONTH.
*Please see below.

CONTACT

Christopher J. Kane, P.C.

Address: 2207 NE Broadway, Suite 100, Portland OR 97232

Phone: 503-380-7822

Email: chris@ckanelaw.com


We are a debt relief agency.

We proudly help people understand their options and, if appropriate, help them file for bankruptcy relief under the Bankruptcy Code.

DIRECTIONS

CONNECT

  • Email
  • Facebook
  • LinkedIn
  • Twitter
Avvo - Rate your Lawyer. Get Free Legal Advice.
Best Bankruptcy lawyers in Portland
Best Bankruptcy Lawyers in Portland

* Using this form, or email, for communicating with us does not establish an attorney-client relationship, until we do that in writing. So please do not send confidential or time-sensitive information through this form or by email. You affirm that you have read and understand this disclaimer.
CAUTION: This website is to provide visitors with basic information about our firm, and information about how to contact us. Every situation is different, and no information on this website is legal advice on any specific question. You should not act on any of the information without first conferring with an attorney licensed in your jurisdiction. No attorney-client relationship or privilege is formed by visiting this site or by unsolicited email. Therefore, initial emails should not contain any confidential information. We may already represent parties adverse to you and cannot advise or represent you until we check for conflicts. We are licensed only in Oregon and offer our services only to those doing business in Oregon, unless we are associated with local counsel in accordance with other states laws. The applicable laws may have changed after the information on this website was published. While effort is made to keep the information current, you should not presume that all information is up to date. You must confer with an attorney to be sure you have current information.
Copyright © 2021 · Christopher J. Kane Attorney at Law · 503-380-7822 · Designed by Artizon Digital