what happens when you surrender a house in chap 13?

[jmonez]

so i still have an extended 341 meeting in 2 weeks and still not confirmed, we see what happens at the 341. My question is that I recently informed my attorney I want to surrender my home(200k) negative, he said call my lender, and I did, and they said no problem, just tell us when you have vacated the property!

So now if I move out and surrender the home, will I still owe or will it be all included in my chap 13? will I still need to pay property taxes(late) or insurance or power bills? Should I just move on and forget it? Any suggestions? Oh also will it report as forecloure or just "included in B.k"

Thanks for any help, I just cant seem to get any straight answers from my attorney, so if anyone has any personal experiences, please share.. thanks

[DeadManCrawling]

Property taxes are generally attached to the home. However, you MAY owe for the period between now and the time when the deed is actually taken by the lender. The lender can hit you for the taxes legally, some do some do not.

You will be responsible for HOA fees until that time as well, regardless, if you have a HOA to worry about.

Other than that, I can't think of any strange things to expect.

Oh, no need to move out immediately. The lender will probably not get to you for a while. Could be weeks, could be months. Certainly don't do anything spiteful like wreck the place. That will NOT be discharged and they will sue and win. You don't sound like that type anyway, but some people do such things. Consider it free rent until they tell ya to split

[Justpoor]

But what does that do to your disposable income? My mortgage is $2k a month. I would love to dump and get an apartment but will the TT just make me pay more!

[justbroke]

But what does that do to your disposable income? My mortgage is $2k a month. I would love to dump and get an apartment but will the TT just make me pay more!

The Trustee (Tee) will make more money if your apartment/allowance is less than $2K (and you weren't otherwise already in the negative for your disposable monthly income).

[justbroke]

so i still have an extended 341 meeting in 2 weeks and still not confirmed, we see what happens at the 341. My question is that I recently informed my attorney I want to surrender my home(200k) negative, he said call my lender, and I did, and they said no problem, just tell us when you have vacated the property!

You don't need to technically vacate, until after foreclosure. You should be well prepared to leave, but you should stay as long as you can to save up funds for your move. You are more than likely going to be met with large deposit requirements for electricity, water, sewer, gas, and even for your new apartment.

So now if I move out and surrender the home, will I still owe or will it be all included in my chap 13? will I still need to pay property taxes(late) or insurance or power bills? Should I just move on and forget it? Any suggestions? Oh also will it report as forecloure or just "included in B.k"

You will absolutely not be responsible for any property taxes on that property. This includes pre-petition and post-petition assessments of property tax. Property taxes attach to the property. When the Bank gets the property (through foreclosure sale) they will pay the taxes.

You can tell the lender that you are dropping insurance, and they will put insurance on the property to protect their interest. Generally, they don't put insurance for the contents... only the structure. You would also tell them you're shutting off all utilities. The Bank/lender would then put them in their own name. This, of course, is based on you actually abandoning the property. If you stay there until the end (foreclosure sale), then you should be paying these bills.

This is from personal experience.

Edited to add, that the foreclosure would report as Included in Bankruptcy (Or Wage Earner Plan, until discharge).

[Justpoor]

That's what I thought. I guess I would rather pay the trustee than the mortgage on a worthless house. Thank you for the info.

[justbroke]

That's what I thought. I guess I would rather pay the trustee than the mortgage on a worthless house. Thank you for the info.

Technically, you're not paying the Trustee (Tee). What you are doing is paying more back to your unsecured creditors!

[Justpoor]

But in five years I will be done. If I keep the house I will be paying for 28 years as the house is unsaleable (sp?). It's a lovely chinese drywall home.

[jmonez]

So because my b.k has been filed, if I am surrendering the home technicaly I would therefore not be making payments any longer to the mortgage company, and doesnt that cause a problem with the b.k and cant the trustee discharge my b.k for that? Or is it not a problem as long as I tell them I no longer intend to keep the home and am surrendering it before a 30 day late shows up? Any suggestions? It sure would be great to save up some funds for a few months to save up for trustee payments and also future rent and security deposists.

Also How hard is it going to be to find someone to rent to me while in chap 13? My income is great, but my credit now stinks?

[DeadManCrawling]

You will absolutely not be responsible for any property taxes on that property. This includes pre-petition and post-petition assessments of property tax. Property taxes attach to the property. When the Bank gets the property (through foreclosure sale) they will pay the taxes.

This is historically accurate.

However, I have read more and more cases where banks have held the debtor responsible for property taxes. Legally, at least in Florida, they are able to do so. In the past they have not, as that encumbers the property in some fashion, and prevents future sales from being tidy. Delays them even.

In the current market (here anyway), there is not much chance of a property selling quickly. If you run a search on the matter, you will see the cases.

Just a warning that it's possible that you will indeed be held responsible for property taxes. It is not certain, perhaps even unlikely, but definitely possible.

[DeadManCrawling]

Renting after BK shouldn't be that hard.

I actually know landlords who look for BK filers specifically.

They want renters who have enough income to pay. of course. But filing BK prior is attractive, because theyknow you have few options except to make sure you pay and on time.

It makes sense, I guess, and they usually assure themselves of a good tenant

[justbroke]

TJust a warning that it's possible that you will indeed be held responsible for property taxes. It is not certain, perhaps even unlikely, but definitely possible.

DMC, do you have any caselaw which supports this (from the Bankruptcy Code perspective)? I'm in Florida and I haven't read anything in my District -- or any other Florida District -- resembling this. This was of particular concern to me when I was surrendering my homestead property that had a very significant amount of back property tax.

I would agree that a Lender could recover the amounts they paid for taxes through the deficiency process... the tax liability is not "directly" the debtor's.

Deficiency is always the mechanism for the Lender to recover all sort of lost monies (insurance, interim "maintenance" and upkeep, property taxes, etc.).