Property Insurance Issues-Surrendered Home.

[gmk]

Friends of mine have filed and gone through their 341 for a Ch7 a couple of weeks ago.

They are surrendering their home and they have moved out. The mortgage company notified their insurance company and their property insurance got canceled, probably because the property has been abandonded. Last week, after their 341, the mortgage company sends them a bill for app $8,000 for a new property insurance policy.

Wouldn't this get automatically get covered in the BK filing?

Isn't this in violation of the automatic stay?

The property is in Virginia.

Thanks.

[SMinGA]

Would depend on what is required of the homeowners - prior to the bank taking it over I imagine. Did they move out with the ok of their attorney? Its possible they could be liable for property insurance after date of filing until the bank forecloses. Best to consult their attorney.

[justbroke]

Yes, this is covered by the bankruptcy. They do not need to pay this bill. I would have them look at the bottom of the "bill" or "notice" and see how it actually reads. Most of those bills have a "disclaimer" at the bottom which indicates that if you are in Bankruptcy or received a discharged in bankruptcy, it's not an attempt to collect.

Whether it's a violation of the stay, is another matter. As I wrote, the disclaimer may be there and they may not be trying to collect, and it's just informational. Even if they did send a bill, the first one is almost always "acceptable". Your attorney would just send a "nasty" letter telling them not to do it again, and if they did do it again, it would be met with a stay violation motion.

I don't see any way that they would be liable for property insurance post-petition if they surrendered the home.

[youngbroke]

I was just going to post a similar question about myself. My insurance hasn't been canceled yet that I pay, because I was going on the advice of others to keep on there until bank takes over deed; but then the other day, I get a letter in the mail from BOA stating that they have placed insurance on the "Vacant" house in the amount of $3500, but they do have on the last page(something to the affect of, "if you filed bankruptcy, this is for informational purposes only".....

[gmk]

My friends re-read the last page and indeed, the mouse print had similar language.

Thanks "brokes". They're breathing a bit easier.