BK Question
Hello,
My fiance's business went under and he had to file chapter 7 but now he is going to do a confersion to Chapter 11.
Does that mean the Chapter 7 is discharged?
My other question is we have been living in our home which we bought 3 1/2 years ago (in his trusts name) and we now have approx. $500K in equity.We live in an area in San Diego which has sky rocketed. We would really love to tap into the equity so that we can get rolling on REI. Hopefully we can get our lives back on track. We lost all of our credit and money due to his business going under and my stockbroker which lost me my entire trustfund, all within a months time span Please note I am not complaining, it truly showed us who are true friends are and who only Pretended to be our firends.
I am not a lawyer, but an experienced mortqage broker in Illinois.
It sounds like the Chapter 7 is dismissed not discharged. Dismissed a kind of saying it got cancelled. You changed your mind, and decided to file a chapter 11.
If I were you I would ask these questions of the attorneys who you are paying to advise.
As far as the equity in the house, your attorney shuld be able to put you in a plan to plan to protect your equity in your house.
There are loan programs out there for virtually any kind of credit scenario. Generally speaking, if you have enough equity, it is possible to get a loan against your house, even right after you file bankruptcy, or in some case while you are in bankruptcy. Of course, the Loan to Value is likely to be low, and the interest rate will likely be high. If you do get such a loan make sure you really can easily pay the mortgage, because, at this point you don't want to add to your credit woes by struggling with a mortgage payment that you can't afford.
Chapter 7 calls for liquidation of assets, Chapter 11 debtor stays in possession of assets and makes a plan to pay back secured. and sometimes unsecured, creditors. Most 11s end up back in 7. Also, creditors have to get at least as much in 11 as they would have gotten in 7 the advantage is your fiance doesn't lose the business. There is won't be a discharge in an 11 until all payments have been made to creditors, sometimes upwards of three years.
These are perfect questions for the attorney handling the bankruptcy for you.
Thanks for your advice,
Actually if we refi our payments should be lower then they are now. We bought at extremely high interest rates. Also my fiance's business was a family computer business and they no longer have it because of the BK. The family came together and made settlements ( and paid them) with all the creditors, except for one. So the only payment we have to make now is the mortgage. Car and etc. has been paid off. No settlement has yet been made with the last creditor, this BK has been going on for over a year now. Our house is in a trust so the trustee can not get to it. They were trying to make us sell it so they could get to the equity, but they lost that battle because the house has been in a trust since we bought it (3 1/2 years). And when we put it in the trust we were fiancially solvent, as were we for over 10 years before and 2 years after.
My fiance is an honorable man and wants to pay the creditor which is why he is converting to a ch 11. But we can't refi or anything until it is over because they say we have to take it out of the trust to refi, but the problem is then the trustee can get to it. So our equity and pretty much our REI would be stopped before we even got started. I have just started bird-dogging to learn the ropes and be ready especially if we can not get to the equity.