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Bankruptcy Law/Equity Issues



Wondering how' you'd go about formulating a plan for a MD ch 13 debtor that has over 60k of equity in an investment property(soon to be main property due to foreclosure on the original main property). The homestead exemption in MD only allows about 22k.


That's a very difficult question because of the significant amount of equity.  I am assuming that you will be moving into the investment property or doing whatever is required to claim it as a homestead.  You should be prepared to provide evidence as to the value of the property, as the Chapter 13 trustee might be aggressive in valuing it.  Basically, your only choice is to provide for payments into the plan sufficient to pay the different between the liens and mortgages against the property plus the homestead subtracted from the real value of the property.  (I would certainly try to subtract the reasonable costs of sale from the value, although I do not know if the bankruptcy court will allow that or not).  The real value would probably be what the property could be sold for (net) by a Chapter 7 trustee if you did not pay that amount under the Chapter 13 trustee.

You might consider a plan in which you paid the approximately $60,000 over 5 years.  If you cannot afford to do that, you could propose a plan under which you had a right to live in the house for a reasonable period of time (say, a year), paying a reasonable rent, while you or the trustee try to sell the property.

If you have a person who is willing to loan you the money to pay the trustee or buy the house for you, you can, of course, propose that.  But you haven't said what you financial situation is or will be going forward.

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Michael T. Hertz


I am already listed as a volunteer under "Collections Law," but actually I am a bankruptcy lawyer. I am a member of bar in California and in Massachusetts and have practiced in bankruptcy since 1978 and have also taught bankruptcy law at the law school level (in Maine and Oregon). I can answers questions with respect to all bankruptcy chapters, having represented creditors, debtors, trustees, creditors committees, and persons involved in defending actions in bankruptcy court.


See above. Basically, 33 years of experience.

inactive member of State Bar of California; inactive member of bar in Massachusetts; former member of bar in Maine; former conseil juridique in France.

California Bankruptcy Law Review; Georgetown Law Journal; numerous others. See my resume.

Harvard Law School, J.D.; Pomona College, B.A.

Awards and Honors
Superlawyer in Northern California, 2005 and 2006

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