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  1. #1
    Join Date
    Nov 2011
    Posts
    1

    Default Settlement from Home Builder, Can Trustee Take the Money

    My question involves bankruptcy in the state of: NJ
    We filed a lawsuit back in 2004 against our home builder for defects found in our home . 3 years later we entered into a ch13 plan. At the time of filing for ch13 we did not disclose the lawsuit.
    We simply did not think anything would come out of the lawsuit and forgot about it. Now we are 46 months in on a 60 month ch13 plan. The builder has offered and we accepted a settlement in the amount of $18,000 dollars. After lawyer fees and expenses we will receive appx. $11,000. I contacted the trustee's office to disclose the settlement and obtain info on how to proceed. My expectation is that they would take the money and apply to our outstanding balance in the ch13 plan - shortening our payments. I spoke with a paralegal at the trustees office today and she said it may not work that way. She said we are in the part of the ch.13 where only unsecured deb t remains and they may take the money and pay other unsecured debt. I asked how could it not shorten teh payments - we cannot pay over the ch13 settlement amount, correct? At that point she said she would have to check with the attorney and will ccall me tomorrow (he is in court today). My question is there any way possible the trustee could take this money and not apply to my ch 13 balance and shorten my payments?

  2. #2
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: Settlement from Home Builder, Can Trustee Take the Money

    Are you in a position to pay off the balance of your plan? If so, given that more than 36 months have passed, that may be your best approach to closing out the bankruptcy and potentially avoiding the issue. Of course, now that the trustee knows that there's money that can potentially be taken, that may not be as simple as it might have been a month ago.

  3. #3
    Join Date
    Sep 2010
    Posts
    478

    Default Re: Settlement from Home Builder, Can Trustee Take the Money

    This is an undisclosed asset that never vested back to you when your Plan was confirmed. It belongs to the unsecured creditors. You will most likely have to turn it over and the funds will be used to supplement the amount your Plan was going to pay.

    Unless you were below median income filer your commitment period is either 5 years or payment of 100% of all allowed claims, whichever happens 1st.

    If you were a below median income filer the commitment period is 36 months but since you failed to disclose the asset you have not paid your unsecured creditor what they would have been entitled to had you disclosed the asset.

    I think you are stuck either way with turning over the funds as supplements.

    Please keep us posted as I would like to know what ends up happening.

    Des.

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