Expert: Terry Leeders - 5/19/2008

Question
My Chapter 7 bankruptcy has been turned over to a Trustee due to the equity in my home. My attorney appealed it by using an "Amendment of Value", which in turn, the Trustee has appealed that. Now I'm having to go to court again.  My question is this: What can the Trustee make me do? Can she make me sell my home or can she make me take out a home equity loan to pay off the Creditors? I live in North Carolina.

Answer
The trustee, if they win, can put your home on the market to sell. once they sell, they will pay the mortgages off, they will then pay administrative expenses and your allowable exemption amount for homestead in your state, the rest can be used to pay your creditors.  Now, you have the right to buy out the equity that the trustee would get, so you may want to see what refinance options you have.  You would need court approval to refinance, and then can give the money to the trustee.  You can also pay the trustee from an alternate source-liquidate a 401k, family or friend as well.  The trustee will usually defer to let you keep the home if you can come up with the funds to pay.  Your attorney can help negotiate a settlement if you do not win your Amendment motion.