Confirmed Chapter 13 and Now a Divorce mixed with a Home Sale....Advice?

[craig1023]

What is the name of your state (only U.S. law)? Texas

Hello,

Late last year I filed for Chapter 13 and the case was confirmed in Jan this year as a 100% plan. On top of that stress, in March my wife has decided to pursue a divorce - there's a 60 day wait period in my state before the divorce is finalized. As a result, I have 4 main questions I'd like to get answered if I could please:

1) Will my 13 automatically be converted into a 7? It would appear I'd fail the means test now with the loss of the combined income and significant increase in expenses.

2) If the 13 does not convert to a 7, what happens to the proceeds from the sale of the home? She wants 50% of the home sale proceeds, my wife (soon to be ex wife) was not included in the bankruptcy.

3) If the case is converted to a 7 in the middle of a home sale - what happens to the proceeds of the home?

4) Can you even sell a home in a bankruptcy? I'd assume the lender wants to be made whole and would accept the sale of a home?

Thanks all

 

[despritfreya]

1) Will my 13 automatically be converted into a 7?

No. You should discuss with your attorney the change in income/expenses. Maybe you can convert maybe you can’t. Maybe conversion is not a good idea. Maybe a Plan modification to reduce payments is the proper course. There are too many variables and options and we do not know anything about your case.

2) If the 13 does not convert to a 7, what happens to the proceeds from the sale of the home? She wants 50% of the home sale proceeds, my wife (soon to be ex wife) was not included in the bankruptcy.

I assume this is your homestead residence. I believe your home is 100% exempt. If so, then the bankruptcy court should have no interest in it. Division of the proceeds will be up to the divorce court.

3) If the case is converted to a 7 in the middle of a home sale - what happens to the proceeds of the home?

Same answer as above.

4) Can you even sell a home in a bankruptcy?

Yes. You may or may not need a court order - that would be up to the title company since you have a confirmed Plan.

Des.

 

[adjusterjack]

I believe your home is 100% exempt.

Generally, yes.

https://law.justia.com/codes/texas/2017/property-code/title-5/subtitle-a/chapter-41/

 

[craig1023]

Thanks y’all - it’s our only home and is our homestead. So the trustee can’t take the proceeds and apply to the debt did I get that right?

Thanks