Home Equity and Refinancing
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Bankruptcy Law

If you're in Chapter 13 but your 2nd home is excluded can you refinance it without alerting Bankruptcy Court?

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Wiki User
May 17, 2008 8:47AM

No, the second home is is not excluded. Everything you own is

part of your bankruptcy estate and is the property of the

bankruptcy trustee, including the second home. You would need court

permission to refinance either of your properties. To do so you

have to bring a motion requesting said permission and showing how

the refiance would benefit your creditors over the plan you already

proposed. As part of the motion you would have to propose an

amended plan that includes the refinance. Since the property is

not, due to the bankruptcy, owned by you, you shouldn't be able to

refinance it. The tirle company should pick up on the bankruptcy

and not allow the refiance. An alternative to getting court

permission is to simply dismiss the chapter 13 case and do whatever

you want. You have a right to have the case dismissed. You just

need to submit the request to the court and wait for the judge to

sign off on the dismissal order. I get the impression that you

didn't list your second home in the bankruptcy (is that what you

mean by "excluded?"). If so, you committed bankruptcy fraud and

your bankruptcy case could be dismissed and charges can be filed by

the US Trustee, part of the Justice Department. At best the trustee

would want you to add the additional property to your papers.

Adding the additional property would change your bankruptcy case

(assets) and the plan you filed with the court that was determined

by your assets and debts.

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