QUESTION

If I sell an unencumbered nonexempt asset, do the creditors receive the appreciation or do I?

Asked on Apr 14th, 2016 on Bankruptcy - Colorado
More details to this question:
I'm in a 5 year chapter 13 plan. My applicable commitment period is three years. I opted to extend to five years to pay for nonexempt assets. I have a lawyer who is non responsive. I am currently over 3 years into the plan. I would like to sell the asset, pay creditors the nonexempt value (value set at time of filing) and use the excess proceeds (appreciation acquired during the last 3+ years) to pay off my plan. Nonexempt assets at time of filing is $24,500. Property to be sold valued at $11,500 at time of filing. Sale price is now $25,000. Is this allowed or not? Does appreciation of an asset sold after the "applicable commitment period" go to the debtor or the estate? Again, I have an attorney who will not respond. I have contacted other attorneys who will not take over my case because it is messed up, and they do not want to be responsible for my attorney's mistakes. Yes, I know. I can dismiss this case and file a new one. I can hire a new attorney at any time. However, dismissal of this case, through no fault of my own, requires an even longer waiting period to get a new mortgage. The point of this filing was to catch up on arrears. However, my attorney (actually some young paralegal he pawned the case off on) miscalculated my payment by about $50,000, so I surrendered my house, based on false calculations. File a malpractice suit? Not going to happen. No lawyer around here will consider it. They all said I would have to go out of state to find an attorney willing to sue another attorney. I have been in my lawyer’s office, asked him a question, sat there and watched as he called the trustee's office to see if he could do what I asked. Aren't lawyers supposed to know what they can and can't do without calling the trustee? To me, that's like defense council calling up the prosecutor to get permission. It makes no sense.
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3 ANSWERS

I am not going to get into the problems with your lawyer, although by your account he is not representing you competently or diligently both of which violate the law governing lawyers. Ordinarily the unsecured creditors should r ed Clive the proceeds of the sale although there is authority for the proposition that the increase in value under this particular set of circumstances belongs to you. Not every federal district may agree. You really need a lawyer in whom you can have confidence.
Answered on May 19th, 2016 at 6:38 AM

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You will need to sit down with an experienced BK attorney to review your CH13 file with him or her. Of course, you will have to pay for the consultation. I think one hour would be appropriate.
Answered on May 18th, 2016 at 6:44 PM

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Commercial & Bankruptcy Law Attorney serving Powell, OH at Ronald K. Nims
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A lot of lawyers do a bankruptcy every couple years and have no idea how to handle complex cases sounds like you have one of those. Generally speaking, the entire proceeds of a sale of nonexempt assets would probably go to your creditors. If you've got an increase in expenses, you can argue that you should keep some or all and see how the court rules.
Answered on May 18th, 2016 at 6:44 PM

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