Expert: Terry Leeders - 4/14/2009

Question
Terry,

What would you recommend? Location Florida - Situation, a person is considering filing personal bankruptcy to discharge all unsecured debt (no repayment plan) and they own a primary residence in Florida and a residential property out of state.  They would like to stay in Florida and sell the out of state property but would prefer to keep any proceeds to payoff Florida property (or lower current FL property debt) vs. those proceeds being divided up among the unsecured debtors. Can this be accomplished?

This person can easily show their current income is still not sufficient to support living expenses and Florida property without the proceeds from other property helping to lower this debt.  This person can also show age and physical shape prevents them from earning any additional income other than social security.

How should they handle the out of state property?  They have not filed personal bankruptcy as of yet.

Thanks in advance for your help


Answer
For bankruptcy, it sounds like there is equity in the out of state property. If so, and if a chapter 7 is filed, the Trustee will liquidate the asset to pay the unsecured creditors.  If you want protect it, then you need to look at chapter 13, which would be difficult without extra disposable income.