proposal and house equity

May 22nd, 2007 by Questions

If I file a proposal which involves paying out the equity in my house plus additional, is there a lien on my house? Am I free to sell it and pay the payments with the proceeds? Alternatively, if a relative were to give me the lump sum amount of equity in my home and I filed a proposal based on giving this lump sum equity plus additional payments (and they accepted the proposal) would it be okay if I transferred the title of the property to the relative who paid the lump sum? Basically, once a proposal is accepted involving paying out the equity in the home, can I do what I want with the property, as long as I pay exactly as was accepted in the proposal?



One Response to “proposal and house equity”

, Barton Goth GCO Bankruptcy Trustees said:

This is sometimes a sticky situtaion and the reason is that it is not the filing of a proposal that erases the debt (i.e. the lien) but the finishing of a proposal. So normally the lien stays in place until the end.

Therefore the answer to the rest of your quesitons is essentiallly no, you cannot do whatever you want with the property. The only real exception to this is if you wanted to sell the property. In that type of scenario you can usually get all parties permision (i.e. creditors and court) and have the lien removed early, although one requirement of this would be the monies paid directly to the trustee as opposed to you.

The one thing I would recommend is to confirm these details with a local trustee as there can be significant variation in each jurisdiction.

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