I’m underwater and in Judicial Foreclosure and I‘m thinking on converting my condo into a rental property then hire a lawyer to file Chapter 13 to stop the Judicial Foreclosure and to get the principal reduced to market value...Is this possible?
If yes, would the bank pursue the deficiency against me?
Do I have to rent the place for six months before filing for Ch 13 or can I do it right after I rent it?
Will the court require the cash flow to pay off the property in six months (5 years)?
Personal Injury Lawyer
Yes, you can file to stop the foreclosure. And yes, you have to pay off the crammed down amount within 5 years. As you can see then, this usually only works for properties under $90k, which is kind of the "sweet spot" for rental income being high enough to cover the new payments. The house must break even or the trustee will oppose your keeping it. It's a stressful process because Ch13 eats up ALL of your disposable income.
The bank can't pursue a deficiency apart from their claim in the Ch13. Not necessarily 6 months but the more the better, since you have to show that it is income-generating. You can rent it before filing but you need it as a rental before filing (although recent rulings in Ch11 are different which goes off of confirmation).
Clark County, Nevada practitioner.
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Chapter 11 Bankruptcy Attorney
I highly recommend for you to consult with Dorothy, who will soon answer this question :)
her profile is: http://www.avvo.com/attorneys/89104-nv-dorothy-bunce-2805621.html
But yes, all this looks good, you just need to dot your i's and cross your t's.
The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here. Please visit my web site: www.avanesianlaw.com for more information about my services.
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Chapter 7 Bankruptcy Attorney
If you are currently living in this property, you should immediately apply for the Nevada foreclosure mediation program. You only have 30 days to apply for this program, which could allow you to look at a modification of your mortgage loan.
There is one attorney in Las Vegas who I call the "King of the Cramdown." He is the expert in doing what you are proposing, so if you need to buy some time to make a cramdown work, he will know exactly how long and what to do. Call me & I can give you his name & phone number. Hope this perspective helps!
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