Q: Could a debtor from chapter 7 with abandoned house file for a chapter 13 to save her house?
My friend is in chapter 7 in SF Bay Area in Northern California. Her house is abandoned by her trustee recently.
Her trustee has been pressuring her to reduce or give up her homestead exemption, and she has been resisting. Her attorney terminated his representation during this disagreement. Her attorney was prepaid for chapter 7 case. The judge has ordered abandonment and she expects chapter 7 case to be closed soon. Since her mortgage is in arrears, she is afraid she can lose her house.
Could she file for chapter 13 after chapter 7 is closed? She is unemployed and has very little money. What can she do to protect her equity in the house?
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A: Yes she can file a Chapter 13 to save her asset. However, this would stop the foreclosure for a very short period of time. She has to be able to pay the arrears and the current mortgage or the bank will foreclose on her house. Specially, if she is not under the Stay protection. depending on the house location, she can rent the bedrooms and get contracts and she can have a family member to cosign the mortgage and then she will protect her asset. The bank can negotiate with her during the Chapter 13, but in my experience, the bank will insist in full payment and will not show any mercy. I also suggest any state sponsored program through the attorney general to negotiate on your friend's behalf. Best of luck.
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A: Continued from before...She could also sell her equity to a buyer who could enter into a short sale. Best of luck
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