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  • Bankruptcy effect on my tenant

    Two years ago, when I was unable to sell my previous home, I leased it
    out long-term to a good friend who is faithfully paying the rent and
    has the option to buy after a period of 36 months. His rent covers the
    first mortgage of about $40,000 plus a home equity loan with another
    bank, with a balance of about $5000. The tenant figured it would be 36
    months before his credit rating would be good enough to get his own
    mortgage because of a bad mark on his credit.

    I have been living in a new home the past two years. There's a new
    mortgage with yet another bank. Between my consumer debt (about
    $12,000), the new mortgage, and some bad luck, I've gotten in over my
    head and stopped paying for the unsecured debts about one year ago. I
    am currently being served papers by two of my creditors and have
    pending judgements. One of them, Beneficial of New York, is ready to
    garnish my wages. I'm finally ready to hire an attorney. I don't know
    how I'll pay for one.

    My question is that if I declare bankruptcy, what is likely to happen
    with my tenant and the house? Are there any solutions that would allow
    him to keep his home, assuming he doesn't have enough for closing
    costs right now and/or may still have too low a credit score to
    qualify for a mortgage? Would it make any difference between my
    pursuing a Chapter 7 or a Chapter 13? I live in New York State.

  • #2
    Bankruptcy effect on my tenant

    [email protected] (land-lowered) wrote in message news:<[email protected] com>...
    My question is that if I declare bankruptcy, what is likely to happen with my tenant and the house? Are there any solutions that would allow him to keep his home, assuming he doesn't have enough for closing costs right now and/or may still have too low a credit score to qualify for a mortgage? Would it make any difference between my pursuing a Chapter 7 or a Chapter 13? I live in New York State.
    There is certainly a difference between Chapter 13 and Chapter 7.
    Chapter 13 is a repayment plan that, if you qualify, would allow you
    to keep the house and probably continue your present deal with him. I
    don't think Chapter 7 would be feasible for you, assuming of course
    the facts you have given. If you file Chapter 13, most of the
    payments you made to an attorney would come out of your payments over
    the life of the plan, not up front.

    I practice in NY and would be glad to answer any questions you might
    have, if you are able to give me more detailed information. please
    email me at [email protected].

    Robert Stumpf
    Stumpf & Ginter, Esq.

    Comment


    • #3
      Bankruptcy effect on my tenant

      I spoke to two attorneys who each had contradictory advice regarding
      my situation. Both had the opinion I would NOT qualify for Ch13, that
      I was definitely a Ch7 candidate because of my income/expense ratio.
      But the first said that as long as the two mortgages on the income
      property were current, I would have no problem continuing to own the
      rental property (keep both homes). The amount of the rent exactly pays
      for the mortgages on that house, BTW.

      The second attorney said that I am only able to keep my primary
      residence - the other property would be liquidated and my tenant would
      be out unless he was able to buy it himself. That's unlikely since I
      doubt he can qualify for a mortgage or come up with the downpayment
      and closing costs.

      Does anyone know for sure which attorney is right? I need to know
      before I stiff my friend who has paid the rent faithfully for the past
      two years on his "dream home".


      [email protected] (Rob Stumpf) wrote >
      There is certainly a difference between Chapter 13 and Chapter 7. Chapter 13 is a repayment plan that, if you qualify, would allow you to keep the house and probably continue your present deal with him. I don't think Chapter 7 would be feasible for you, assuming of course the facts you have given. If you file Chapter 13, most of the payments you made to an attorney would come out of your payments over the life of the plan, not up front. I practice in NY and would be glad to answer any questions you might have, if you are able to give me more detailed information. please email me at [email protected]. Robert Stumpf Stumpf & Ginter, Esq.

      Comment


      • #4
        Bankruptcy effect on my tenant

        I would need more facts to give you a definite answer, but you have to
        consider two things:

        1) You can only file Chapter 13 if you have enough excess income to
        file a plan (make monthly payments). In other words, you would need
        some source of income to pay the court the necessary amount for the
        plan to work. If both attorneys say you don't have enough excess
        income to do so, that likely means you can't file Chapter 13. It is
        possible to have a friend or relative help you with this by agreeing
        to help you with the payments.

        2) In NY, only your primary residence is allowed an exemption, and
        then for only $10,000 ($20,000 if you file jointly). If you file
        Chapter 7, you can't keep equity in the rental property for yourself,
        that isn't going to happen...and if you a significant amount of equity
        in your primary residence (over ten or twenty thousand), you might
        have a problem there, too. Keeping your payments current is
        necessary under either Chapter 7 or 13, but that doesn't determine if
        the bankruptcy trustee will act to take these assets. To know that,
        you have to first know how much equity you have in each property.

        From what you have said, I think the second attorney makes more sense.
        If someone tells you you can keep equity in a rental property in a
        Chapter 7, I think that is incorrect. Is it possible to refinance
        the houses and pay the debt you owe?

        Rob Stumpf
        Stumpf & Ginter
        [email protected]

        Disclaimer: All email or newsgroup communications are for information
        purposes only, and are not intended to establish any sort of an
        atty/client representation.



        [email protected] (land-lowered) wrote in message news:<[email protected] com>...
        I spoke to two attorneys who each had contradictory advice regarding my situation. Both had the opinion I would NOT qualify for Ch13, that I was definitely a Ch7 candidate because of my income/expense ratio. But the first said that as long as the two mortgages on the income property were current, I would have no problem continuing to own the rental property (keep both homes). The amount of the rent exactly pays for the mortgages on that house, BTW. The second attorney said that I am only able to keep my primary residence - the other property would be liquidated and my tenant would be out unless he was able to buy it himself. That's unlikely since I doubt he can qualify for a mortgage or come up with the downpayment and closing costs. Does anyone know for sure which attorney is right? I need to know before I stiff my friend who has paid the rent faithfully for the past two years on his "dream home". [email protected] (Rob Stumpf) wrote >
        There is certainly a difference between Chapter 13 and Chapter 7. Chapter 13 is a repayment plan that, if you qualify, would allow you to keep the house and probably continue your present deal with him. I don't think Chapter 7 would be feasible for you, assuming of course the facts you have given. If you file Chapter 13, most of the payments you made to an attorney would come out of your payments over the life of the plan, not up front. I practice in NY and would be glad to answer any questions you might have, if you are able to give me more detailed information. please email me at [email protected]. Robert Stumpf Stumpf & Ginter, Esq.

        Comment


        • #5
          Bankruptcy effect on my tenant




          "Rob Stumpf" <[email protected]> wrote in message
          news:[email protected] om...
          I would need more facts to give you a definite answer, but you have to consider two things: 1) You can only file Chapter 13 if you have enough excess income to file a plan (make monthly payments). In other words, you would need some source of income to pay the court the necessary amount for the plan to work. If both attorneys say you don't have enough excess income to do so, that likely means you can't file Chapter 13. It is possible to have a friend or relative help you with this by agreeing to help you with the payments. 2) In NY, only your primary residence is allowed an exemption, and then for only $10,000 ($20,000 if you file jointly). If you file Chapter 7, you can't keep equity in the rental property for yourself, that isn't going to happen...and if you a significant amount of equity in your primary residence (over ten or twenty thousand), you might have a problem there, too. Keeping your payments current is necessary under either Chapter 7 or 13, but that doesn't determine if the bankruptcy trustee will act to take these assets. To know that, you have to first know how much equity you have in each property. From what you have said, I think the second attorney makes more sense. If someone tells you you can keep equity in a rental property in a Chapter 7, I think that is incorrect. Is it possible to refinance the houses and pay the debt you owe? Rob Stumpf Stumpf & Ginter [email protected] Disclaimer: All email or newsgroup communications are for information purposes only, and are not intended to establish any sort of an atty/client representation. J[email protected] (land-lowered) wrote in message
          news:<[email protected] com>...
          I spoke to two attorneys who each had contradictory advice regarding my situation. Both had the opinion I would NOT qualify for Ch13, that I was definitely a Ch7 candidate because of my income/expense ratio. But the first said that as long as the two mortgages on the income property were current, I would have no problem continuing to own the rental property (keep both homes). The amount of the rent exactly pays for the mortgages on that house, BTW. The second attorney said that I am only able to keep my primary residence - the other property would be liquidated and my tenant would be out unless he was able to buy it himself. That's unlikely since I doubt he can qualify for a mortgage or come up with the downpayment and closing costs. Does anyone know for sure which attorney is right? I need to know before I stiff my friend who has paid the rent faithfully for the past two years on his "dream home".
          This is going to sound like a sales pitch, but thats the way it goes.

          This is too easy.

          If you have a written, signed lease, your tennant can get a mortgage as a
          refinance. You give him a number that he has to pay you (which pays off the
          1st & 2nd), and the loan-to-value ratio is based on the appraised value.
          The equity in the home, if structured correctly (and legally, by the way)
          can be the tenants.

          Feel free to email me if you wish for me to give a yea or nea on if it will
          fly.

          sales at inet-lender dott commmmm


          --
          Michael Papp
          Neustar Financial
          iNet Lending Group
          www.iNet-Lender.com
          MSN Messenger ID - iNet-Lending


          Comment

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