Timeline when surendering a house?

[tay666]

Ok, I know this is going to vary widely from person to person, and situation to situation. And we can get more accurate info once we get a lawyer to explain it all to us.

But I was wondering roughly what order things happen.
We are completely current (and always have been) on our house payment.
But we are still going to loose it if we file a CH7. Living in Ohio, we don't get enough of a deduction to come close to covering our equity.

So, if we file CH7 what happens in regards to the house?
Do we stop making payment then?
Does the bank start foreclosure proceding then, or do they have to wait until after the 341 meeting?
Is the whole bankrupcy pretty much on hold until after the house goes to sherrif sale?
How long can this whole thing drag out?

I'm just trying to get some idea of what we are looking at here.
Still waffling on a couple different plans of attack so I am trying to wrap my head around as many of the contingencies as I can.

(BTW - sorry for any spelling or grammer problems. Been up for about 18 hours now, and just getting ready to hit the hay)

[calif]

Hi!
Here is a link to some great information on your situation.
Please note that it is recommended that you file Chapter 13 which will allow you to keep your home and the equity you've accumulated.

http://research.lawyers.com/Ohio/Bankruptcy-in-Ohio.html

[SamanthaJones]

But if you ARE going to file 7 vs 13 and give up the house?

I think I'd stop making payments straight away, and save that money for moving.

[SinkingFast]

Timing really depends on the Law in the State of Ohio. From what I've read, Ohio is a Judicial Foreclosure State. The typical timeline is 150 days.

Since you're current on your payments, generally what happens is,.......... After you miss your 2nd payment and your grace period has passed, you'll get a notice of Default and Acceleration. Generally Lenders will give you 30 days to Cure. That's "pay up or else". If you don't Cure the Default, then the Lender moves to Foreclose.

So you're looking at minimum of 5 months. Probably more like 6.5-7 months from your first missed payment until the actual sale.

If you live in an area with lots of Foreclosures, the Lender may wait until a later time when it better suits them to Foreclose. Lenders don't like to have lots of REO properties on the balance sheet. It does not look good to prospective investors.

Generally, the Trustee takes a fair market value of your home, deducts out reasonable sale costs and your Exemption. That establishes the $$$ amount you'd have to pay to settle a Ch 7. That would be, you pay $$$'s to the Trustee and keep your home.

If you have a smaller amount of equity, you might be able to negotiate a payment plan with the Trustee. You'd pay the difference between what you can Exempt and what you'd make if you sold out right over a period of 12 months or so.

To know where you really stand, you'll need to talk to a qualified BK attny. An experienced attny will know the Trustees in your area. What the Trustees will and won't accept. How to handle your particular situation.

Personally, I'd suggest you Consult with at least 3-4 BK attnys to get different perspectives on your situaiton.

[tay666]

Hi!
Here is a link to some great information on your situation.
Please note that it is recommended that you file Chapter 13 which will allow you to keep your home and the equity you've accumulated.
http://research.lawyers.com/Ohio/Ban...y-in-Ohio.html

Would love to.
But realistically, there is no way we could pay into a CH13.
With the wife's reduced work hours due to ongoing medical conditions, we don't even have $100 a month left over to put towards a 13.
Which is also where another problem comes in.
If we loose the house, anything we rent is going to cost us more than our house payment.
Our house payment (including insurance and taxes) is $430 a month.
Everything I have seen in the papers the past few weeks that I have been checking is around $600 on up. Appartments aren't an option, because there aren't any (except 1 room effeciency appartments which won't work for a family or 3). Everything in this area is either a whole house, or half a duplex.
So we are in a catch 22. Can't afford a 13, and can't afford to move.

Though realistically. once the BK is done I can pick up extra work with several local contractors to make up the difference. If I tried doing something like that in a CH 13 the trustee would probably want to redo the deal because of increased income.

For now, we are staying current on the house payments until we have a clear path in front of us. We are still waiting at least another month anyway.
As my wife was still working full time at a higher paying job back in October (when the medical issues first arrose). So we are waiting for that to be at least 6 months behind us to reflect our true income when looking at our pay stubs.

What I was curious about is how long will the whole forclosure thing drag out the CH 7?
I mean, if the trustee has to wait for the forclosure, and the house to sell, then it could keep the CH 7 open for quite a while.
We are in one of the highest areas of forclosure in the state of Ohio right now. So I don't even know how long it will take to sell.
And the thing is. Even though, on paper we have about $30,000 in equity.
I doubt after a sheriffs sale that the trustee will actually see any money.
The bank will probably be lucky to get back what is owed on it.

[calif]

I believe SinkingFast gave you some good answers to a timeline.
However, it seems reasonable to me to continue to sit on your property and maintain your payments rather than to deal with two different issues.
As you know, forclosure is a different process than a forced sale.
As you stated with the high forclosures in your area, it might not be prudent for the trustee to force the sale of your home.
I would advise waiting to see what the trustee has in mind before deciding on your next move.
After all, your creditors are the last to get paid out of what's left after your exemption, and the costs of selling your property.
As SinkingFast pointed out, it's very possible the trustee might allow you the prospect of you setting up a payment plan for the true equity.
The payments might not be anymore than the higher rent you spoke of.
Anyway, these are just my novice opinions for what they're worth.
Best of luck to you.

[SinkingFast]

This is just a guess, but,...........

If the Foreclosure process has started when you file BK,........... Since you have equity, the Trustee is probably gonna step in and sell the house.

The Trustee gets a cut of any monies recovered "on behalf of your Creditors". So rather than let the house Foreclose, the Trustee will probably arrange to sell it. As in sieze your house to be sold by the Court.

If that happens, your BK could be held up for quite a while. Not the normal 341 and 60 Days part. The Closing part. The Trustee won't Close your BK until the house is Sold and Closed and any proceeds are distributed to your Mortgage Lender, You for your Exemption, and the remainder to your Creditors.

[tay666]

Well, the house was last appraised at around $50000.
But that was about 4 or 5 years ago.
We owe about $20,000 on it.
In Ohio, we only get a $10,000 deduction for the both of us, so that leaves us with about $20,000 in equity on paper.

The thing is, back when it was appraised, we had it on the market for over a year and couldn't sell it for $50,000. And that was when the market was booming around here.
Now there are lots of comparable houses listed for less than that, and they are staying on the market forever also.
Add in the fact that we haven't had the extra money to maintain things and that it needs some big ticket items (like a roof, gutters, etc), and the high forclosure rate. I doubt it will sell for much more than $30,000 after closing costs and such.

If the trustee wants to seize it and try to sell for enough of a profit to pay any other creditors, we could be stuck in limbo for a long time.
If that happens. How much time do you get to move out?
That is, if the trustee seizes it.
These are the kinds of things I am trying to learn. That way I know if I should be ready to move on short notice. Especially since a lot of landlords want first months rent, last months rent, and a security deposit up front.

The way the market around here is nose-diving this could get interesting.
Our city has a population of 13,000 and there are over 200 houses on the market right now. 100 of them for less than $100,000.
Everyone is selling, and no one is buying.
How long can the court try to sell a property?
Are talking years here?

[jal1129]

As I was reading thru this thread I have'nt noticed if you said if you actually want to keep the house or not. If you do want to keep it I would'nt stop making payments until you have talked with a lawyer and are sure you will loose it. If the value is falling, which it sounds like it is, it may be closer than you think and you may be able to make payments for the differnce (which may not be that much).

[tay666]

As to weather we want to keep the house or not.

Would love to be able to stay here at least a couple more years.
Wait out the market downturn and make repairs as we come up with the money for it. Then after our daughter graduates and goes off to college we could look for something better for us.

But, if we have to pay even more to keep it. Then no.
Which is why a CH 13 isn't really an option. Payments for 5 years. Plus the costs of fixing things. Coupled with the fact that the house doesn't really suite us anymore.
We would be better off letting it go and starting fresh. Unless we are talking about a very minimal amount to save it.

Just going to be a big pain to move. We have been in this house for 15 years now. So we have a ton of stuff.
I keep trying to talk the wife into stating to go through things now and thin things out but she doesn't want to deal with it yet.
Which is another reason I am trying to get an idea on the timeframes we are looking at.
It's gonna take a while to pack stuff up. And we could pack some stuff up that we don't use ahead of time. But we did that before when the house was on the market and it was a big pain as the months passed without a sale. So I don't want to start that too early if we are still going to be here 6 months from now, or more.

[SamanthaJones]

tay66-

If you are in an easy position to make excess income after you file bankrupcty- good news. I wouldn't let that slip to, say...the trustee? After all, we ALL have our share of little secrets?

[SinkingFast]

Jal makes a good point. Your actual value NOW could be closer than you think.

With the down turn in existing housing sales, more properties in Foreclosure, and the tightening of the sub prime Lending market,............ A current appraisal might bring you closer to keeping your house than your 4-5 year old appraisal value.

If comps in your neighborhood are selling for $30K, then your house is likely to appraise closer to your current Loan pay-off plus your Exemption than you might think.

And Trustees are not stupid. They aren't going to go after a property they know won't sell in a reasonable period of time. The Trustee may get a cut of the proceeds, but the Trustee also has costs to sell. Same as you and me.

The average cost to sell a house is about 10% for the Court. So the Trustee's gotta be fairly certain the house is gonna bring $20K for the Lender, $10K for you, AND pay the Trustee's costs to sell plus the Trustee's cut before they're even gonna bother.

A free way to get an idea of what you're looking at,.......... Call some Realtors. Tell them you're thinking of selling. You don't have the resources to make the repairs so the property is gonna be sold "As Is". Realtors will give you a free Market evaluation that will be very close to an actual appraised value. Then you'll know better where you stand.

[tay666]

If you are in an easy position to make excess income after you file bankrupcty- good news. I wouldn't let that slip to, say...the trustee? After all, we ALL have our share of little secrets?

Oh I know.
He isn't going to hear anything about that.
As a matter of fact, I am not doing any side work, and haven't since October.
Just to be sure that everything is on the up-and-up when we do file.

The thing is. If we do file, and things drag out for a long time.
Is the trustee going to look for me making more money after I file?
I mean, if my income increases after my filing date, but before my closing date, could that affect my CH7?
We are well below the median. And even the extra money I could make woudln't put us over it. But if could make a difference if we have to redo the means test again.
I know in a CH 13 income changes can affect the plan. But do income changes have any affect on long drawn out CH 7?

I'd really like to get some extra cash working this summer.
But right now I have told the contracter that I can't work unless he can keep the pay completely under the table. Which, with the amount I make, he can't (I get a 1099 every year for what I make from him)
What I bring home in one week from my real job, I can get doing construction for 16 hours. So even just a few weekends can make a big difference. But if the trustee can keep looking at my income, I am not going to be able to do any extra work this summer and will have to come up with other plans.

[tay666]

SinkingFast I am kind of hoping that the trustee will see no 'real' equity to go after. But realistically, with my luck, things won't go that way.
The realtor idea is a good one, and one I hadn't thought of.
Will wait until we actually get closer to filing and see what the lawyers say in our consultations.
Besides waiting longer, there is even more of a chance of our local market sinking even more.

[SamanthaJones]

Conneat- 214 houses for sale under $200,000.

And for only $30,000- looks like you can get quite a nice house- simply amazing. The minimum for a livable house, that would still need updated or repairs, in AZ, is over $200,000.