Large Equity Increase in Home During Bankrupcy – is this at risk

June 17th, 2005 by Questions

When I declared bankruptcy. The equity in the house was about $25,000 and the trustee figured that once the house was sold an all fees were paid, it was not worth selling off as an asset.

Two things are happening. Im paying down two mortgages, and the housing prices in our area have skyrocketed, so by the end of the bankruptcy, I will have about $70,000 equity in the property.

Can the trustee and creditor come along at (or just before) the discharge hearing (this is my second bankruptcy) and say the house must be sold.

Questions

One Response to “Large Equity Increase in Home During Bankrupcy – is this at risk”



June 20, 2005 at 1:33 pm, Barton Goth, GCO Inc. Bankruptcy Trustees said:

Yes, the trustee and/or a creditor is required to notify the court if there are any substantial changes in circumstances during the course of a bankruptcy (i.e. an increase in the equity of the house). It is then up to the courts to determine whether or not proceeds must be realized with respect to this increase in equity. As a result of a number of decisions that primarily came of Alberta in late 2002 the courts have typically seen this increase of equity as a benefit that must distributed amongst a bankrupt’s creditors and may potentially require the sale of the property in questions. This is the approach we have seen in Alberta over the last 2 years, but I recommend contacting a trustee in your area to confirm that your local courts have been following the same standard.

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