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Chapter 7, Texas, Trustee Report of Distribution, Title Company says "No"

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    Chapter 7, Texas, Trustee Report of Distribution, Title Company says "No"

    1 week away from closing. Title company won't move forward. House is already sold and buyer waiting. New house already signed on but 10% down comes from the proceeds (gift) of the sell of this existing home (my parents) who had to file chapter 7 but house is homestead and we have the Report of No Distribution and all other requirements met. Selling the home...pays off all parents debt. I put the new home in my name. Contract signed. Everything continguent on the sale of this home. CH7 attorney states this letter is all they need. Title company says not enough. But can't give a viable reason other than "to risky".

    My parents are in their late 70's. My dad is a teacher and works a second job at a large retail chain. There is no way I'm going to leave them hanging. We get an attorney and file Chapter 7. In, state of Texas. Set of exemptions on Official Form 101:
    (check) You are claiming state and federal nonbankruptcy exemptions: Yes
    Reference: Const. art. 16 §§ 50, 51, Texas Prop. Code §§ 41.001-.002

    Amount of exemption: $174,XXX.XX @ Current value of $300K (roughly)
    Did you acquire the property of the exemption within 1215 days before the case = No

    We put the house on the market. We have a buyer with 20% down for asking price. Equity in home is $140k or so... Enough to put 10% down on the new home that I'm buying for my parents - they can't buy a home, have nowhere to go. The 10% is a gift and buying the new home contingent on selling their existing home.

    Chapter 7 Meeting was 9/26/2019 - fast forward
    11/6/2019 Chapter 7 Trustee's Report of No Distribution (see below)
    11/8/2019 Order on motion for adequate protection
    11/8/2019 Order on motion for relief of stay
    11/13/2019 Notice of appearance and request of notice

    My parents have completed both financial classes. All conditions have been met.

    Our attorney has given them all that is needed - per the attorney. 1 week away from closing. Title Company decides they are not going to take to underwriting.

    We have the letter - from the Trustee (Scrubbed summary below). Attorney states this is enough. Attorney is in car accident and on 3 week medical leave. Title company says the letter isn't enough but no real good explanation as to why. Maybe it's because the address isn't listed in the letter specifically. I can see no downside here; house is sold - debts are paid. New house in my name. They said something about wanting a letter or permission from the Judge to sell the house and yet the house is fully exempt. The amount of the sale is within the 500K boundary. The equity after the sale of the home w/ the 10% down is maybe $60K or less my parents net on selling the home they have lived in 15 years.

    --------
    Chapter 7 Trustee's Report of No Distribution:
    I, <Trustee Name>, having been appointed trustee of the estate of the above-named debtor(s), report that I have neither received any property nor paid any money on account of this estate; that I have made a diligent inquiry into the financial affairs of the debtor(s) and the location of the property belonging to the estate; and that there is no property available for distribution from the estate over and above that exempted by law. Pursuant to Fed R Bank P 5009, I hereby certify that the estate of the above-named debtor(s) has been fully administered. I request that I be discharged from any further duties as trustee. Meeting held and concluded. Debtor appeared. Joint Debtor appeared.

    Key information about this case as reported in schedules filed by the debtor(s) or otherwise found in the case record: This case was pending for 1 months. Assets Abandoned: $ 145570.00, Assets Exempt: $ 184749.81, Claims Scheduled: $ 169042.82. Claims Asserted: Not applicable. Claims scheduled to be discharged without payment: $ 169042.00. (Trustee Name)
    --------end

    Person at the Title Company claims this isn't sufficient. So, I'm trying to formulate a letter or come up with all the reasons why it is. Apparently, the only Title Company in Texas that has never sold a home in Chapter 7. The proceeds of the sell will pay off all debt owed + 10% down on the new home which I am purchasing in my name FBO of my parents. They will be debt free. My dad won't be working two jobs just to get by.

    Back to Form 101
    (Check) - Chapter 7
    Debtor 1 and 2 = Mom and Dad
    Where you live: Address of the property being sold
    Part 2 - Page 3
    Bankruptcy Code = Chapter 7
    Item 10 - No bankruptcy cases pending and no undisclosed debt or liens
    No to all the other questions
    Page 5 - Credit counseling, done. Both, by both mom and dad.
    Page 6 - Are your debts primarily consumer = Yes
    Item 17: I am filing under Chapter 7. Do you estimate that after any exempt property is excluded and administrative
    expenses are paid that funds will be available to distribute to unsecured creditors? Yes
    How much do you estimate your assets to be worth? 100K to 500K
    How much do you estimate your liabilities to be? 100K to 500K

    Page 8 - Schedule C: The Property You Claim as Exempt

    1. Which set of exemptions are you claiming? Check one only, even if your spouse is filing with you.
    You are claiming state and federal nonbankruptcy exemptions. 11 U.S.C. § 522(b)(3)

    Description = <Address of Home>
    Current value = $308,000.00
    Amount of the exemption you claim = $174,498 (Ref: Const. art. 16 §§ 50, 51, Texas Prop.Code §§ 41.001-.002)

    Are you claiming a homestead exemption of more than $170,350? YES
    Did you acquire the property covered by the exemption within 1,215 days before you filed this case? NO

    --------

    Thus far I've taken all this information above and writing a letter with references to prove we can sell the house. I have some decent references like

    https://www.jthomasblack.com/blog/te...-the-money.cfm

    It's not the exact scenario but the ruling in summary:
    So long as you own your homestead on the date of filing bankruptcy, properly claim it as exempt and there are no objections to the exemption, it now appears settled that a Texas may sell his or her homestead, and do what they want with the sale proceeds.

    ------

    Chapter 7, claimed the exemption, zero objections. Attorney states the letter above has everything they need. She is a solo attorney, no backup. She's out of commission for 2-3 more weeks. Next Friday is the close date. The buyers of this house we are selling are living in a hotel room....waiting.

    Not suprised if they back out but Title Company won't budge.

    What am I missing????

    I've been reading everything I can get my hands on. I agree with the attorney. I don't get it. I don't understand what their problem is so I need to make a very convincing argument. I basically need to prove they are wrong or "help them understand" why it is okay for my parents to sell their home and pay off their debt now that we have the Chapter 7 Trustee's Report of No Distribution. Why isn't that enough?












    #2
    You have to remember that a Title Company guarantees clean title. Unless there is an order from the court showing clear title, the Title Co is probably within their rights to say that it is still a risk. A Trustee Report of No Distribution is likely not enough for a title company because it usually just lists the total amount "to be" discharged.

    The fact is that this case isn't even discharged. From what you listed, the 341 Meeting was 9/26/2019 which means the discharge will come 12/26/2019 (the day after Christmas). Since the case is not discharged, it is an absolute risk to the Title Company. The UST could step in and mess with the discharge and cause all sorts of issues with a property that was sold.

    The only way to clear this home, that is in an active non-discharged bankruptcy, is for the Trustee to specifically file a Motion to Abandon and for the Court to grant the motion. Since the discharge will come in another 30 days, that is likely not the best route.

    At least, that's my read.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog

    I am not an attorney. Any advice provided is not legal advice.

    Comment


      #3
      Okay. I tried to find something specific on the motion to abandon. Keeping in mind my parents still live on the property. Would filing abandonment require abandonment of the property and therefore it would no longer fall under homestead?


      Technically the UST is paid off once the house sells. This is where I'm confused. Technically, the trustee could have ordered liquidation of the property. This is a proactive measure and why did the Title Company wait until a week from closing to have a "concern"? The house was on the market for 2 months. The buyers of the property paid a deposit 6 weeks ago and they have since vacated their rental property and living in a hotel room.

      The buyer is putting down $100K on a$ 308K appraised loan. Everything was set for last Friday the 22nd. Then it was moved to Tuesday (yesterday), now it is a tentative for next week. We know, per the trustee, that $169042.00 is scheduled for discharge.

      This is done deal, in writing. We know that the property, under homestead, is exempt and value of exempt property(ies) is $184749.81. The amount owed to the mortgage company holding the title is roughly $140,000.00. The house has a written contract on it now for $308,000.00 with $100,000.00 down payment. Easily paying off the mortgage company and with roughly $130,000.00 in equity (house has doubled in market value). The mortgage company that has the title - wins. They get their money that is owned. Paid in Full.

      10% of that is going to a new home with title, taxes, fees, and MI is about $40.000.00. Mortgage company is paid off at time of sell. All other debt's are scheduled for discharged. The property is the exemption. What I mean is that there are no vehicles or other property unpaid. Just the house. Just the homestead exemption. Everything else discharged.

      It's not like the Mortgage Company would not want the home sold and want to receive the complete amount owed to them. So who is liable? What is the liability? There is no other debts owed. There is no money owed in Taxes or to the Treasury. When the house is sold the mortgage company that services the existing loan is completely paid off and where previously the house payments were being made by way of trustee monthly payments (paycheck garnishment).

      Comment


        #4
        This is not about the Title Company or the Trustee. It's really about whether or not the property is no longer "property of the bankruptcy estate." Without a permission to sell from the bankruptcy court, or a granted Motion to Abandon Property of the Estate, the property is still in the bankruptcy estate until the earlier of discharge or the case being dismissed. The Title company is trying to guarantee clean title, but right now the title belongs to the bankruptcy estate.

        Why did they wait? Maybe they believed that the bankruptcy was already discharged, or would have already been discharged prior to them issuing a title policy. (Or even that they would see an explicit abandonment or permission to sell singed by the judge.)

        As I wrote, this is not about the deal itself. It's about the property status in the bankruptcy. Unless and until the case is dismissed, discharged (or closed), or the court has granted a motion to abandon, the property remains within the bankruptcy estate. That's why debtors seek permission to sell real property by filing a motion. Selling while in an active non-discharged bankruptcy requires permission. That permission is either the abandonment by the Trustee, or the court granting a motion to sell real property.

        I think your specific issue is caused by a procedural problem. If I wanted to sell property pre-discharge, I would have sought permission by either a Motion to Sell Real Property or a Motion to Abandon Property with the court. That would give me a signed order from the judge, allowing the property to be removed from the bankruptcy estate, or the sale conditioned in some manner.

        (I hope that clarifies things for you. The Trustee's Report of No Distribution is useless in this case. It only says that the Trustee is done, while the case is not done. A Motion to Sell Real Property simply asks the court to allow you to sell the property despite the property belonging to the bankruptcy estate. This seems contradictory, as the property is exempt, but exemption doesn't remove it from the estate. It protects it from the estate liquidating the property.)
        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
        Status: (Auto) Discharged and Closed! 5/10
        Visit My BKForum Blog: justbroke's Blog

        I am not an attorney. Any advice provided is not legal advice.

        Comment


          #5
          I do get what your saying I'm just having difficulty finding these motions. I've looked on https://www.txs.uscourts.gov/page/bankruptcy-court
          and
          https://upsolve.org/tx/bankruptcy-forms/

          Technically, it should not be too late to file a motion to sell property. The Judge is in downtown Dallas. I could find another attorney to perhaps expedite just filing that form being the attorney of record is simply incapacitated.

          All these,
          https://upsolve.org/tx/bankruptcy-forms/

          Are the forms that were filled out. I don't want to have to pay an attorney to start the entire process over or perhaps I can fill the form out and do what is needed. I've worked in IT for 20 years and graduated college - surely it cannot be rocket science.

          Any time I can buy now to get this done before Christmas increases the odds that the buyer will hang in there. If the Motion to Sell is granted then that should appease the Title company - well, everyone for that matter. There is no downside to selling the property so there is nothing to be contested.

          Comment


            #6
            These are not "boiler" plate and it may require a hearing. That's why I wrote that you're just 21 days away from discharge so it may not matter. Some of these, including abandonment, may require notice to all creditors that the Trustee is abandoning the property from the bankruptcy estate. This is why these are usually done as so-called "first-day" motions (because they take time).

            It's not rocket-science, but it is the Federal Rules of Bankruptcy Procedure (FRBP) which is the "law practice" equivalent of rocket-science. Procedures are the backbone of jurisprudence. (Yuck, did I just write that!)

            I am not saying it cannot be done, but it could be moot in your timeline. Best bet is to reach out to the Trustee and see if they would agree to an Emergency Agreed Motion to Abandon. Then, procedurally, does your court or the FRBP require notice to interested parties, what is the timeframe, or can it even be done as an Emergency or Ex-Parte.

            (FRBP 6007 governs abandonments... which requires notice to the United States Trustee and "all" parties in interest (all creditors). It also requires a 14 day period for the creditors to object to the abandonment. You then need to add 3 days for mailings (as required by procedure). So that's at least 17 days from the time you would mail that. The kicker is, despite how easy it appears... procedure is important.)
            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
            Status: (Auto) Discharged and Closed! 5/10
            Visit My BKForum Blog: justbroke's Blog

            I am not an attorney. Any advice provided is not legal advice.

            Comment


              #7
              Actually I messed up. If your 341 Meeting was on September 26, 2019 then your discharge should have already happened or will happen really shortly. You should have been eligible for discharge on Monday, November 25, 2019.

              Do you have access to PACER? If not, call the Clerk of the Bankruptcy Court right this minute and ask if it's been entered!
              Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
              Status: (Auto) Discharged and Closed! 5/10
              Visit My BKForum Blog: justbroke's Blog

              I am not an attorney. Any advice provided is not legal advice.

              Comment


                #8
                I was wondering or going to ask how you calculated that date. I do have access to Pacer. I downloaded every form from the proceeding. It was on 9/26 as you stated so is it a 60 day rule or something? 60 days from the 9/26 filing? S0, all that might be required is to contact the Clerk? The court is probably closed at the moment. What would we be asking for? That the "discharge" be entered?

                Here is the index:
                Doc# Dates Description
                21
                Filed & Entered: 11/13/2019
                Notice of appearance and request for notice
                20
                Filed & Entered: 11/08/2019
                Order on motion for relief from stay
                20
                Filed & Entered: 11/08/2019
                Order on motion for adequate protection
                Filed & Entered: 11/06/2019
                Chapter 7 Trustee's Report of No Distribution
                19
                Filed & Entered: 11/05/2019
                Certificate (generic)
                Filed & Entered: 11/01/2019
                Notice of Announcement Regarding Lift Stay Motion
                Filed & Entered: 11/01/2019
                Notice of Announcement Regarding Lift Stay Motion
                17
                Filed & Entered: 10/22/2019
                Financial management course
                18
                Filed & Entered: 10/22/2019
                Financial management course
                16
                Filed & Entered: 10/11/2019
                BNC certificate of mailing
                Filed & Entered: 10/07/2019
                Credit Card Receipt
                11
                Filed & Entered: 10/07/2019
                Notice of appearance and request for notice
                12
                Filed & Entered: 10/07/2019
                Terminated: 11/08/2019
                Motion for relief from stay
                13
                Filed & Entered: 10/07/2019
                Notice of hearing
                14
                Filed & Entered: 10/07/2019
                Terminated: 11/08/2019
                Motion for adequate protection
                15
                Filed & Entered: 10/07/2019
                Affidavit
                10
                Filed & Entered: 10/02/2019
                Notice of deficiency financial management course
                8
                Filed & Entered: 09/29/2019
                BNC certificate of mailing - meeting of creditors
                8
                Filed & Entered: 09/27/2019
                Notice of appearance and request for notice
                Filed & Entered: 09/26/2019
                Credit Card Receipt
                1
                Filed & Entered: 09/26/2019
                Chapter 7 Voluntary Petition (case upload)
                2
                Filed & Entered: 09/26/2019
                Certificate of credit counseling
                3
                Filed & Entered: 09/26/2019
                Certificate of credit counseling
                5
                Filed & Entered: 09/26/2019
                Employee income records
                6
                Filed & Entered: 09/26/2019
                Employee income records
                7
                Filed & Entered: 09/26/2019
                Meeting (Chapter 7)

                Comment


                  #9
                  They are definitely closed at the moment, but give them a ring tomorrow morning. The clerks work hard and they have a tough job keeping order when it comes to the docket. I based the 60 days on the standard timeline which has now elapsed. As you write, and I agree, they were probably busy with the holidays and everything. Nothing to be concerned about.

                  When you call just state that you're calling regarding your open case and wanted to inquire as to whether the discharge has been entered. They will check the docket and tell you whether it has or has not. Please let them do that, and don't tell them that you already checked the docket. They'll specifically check and, in some districts, they'll actually push it through right then if everything is in order. Don't ask them to do push it through, just listen to what they say.

                  Happy Thanksgiving.
                  Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                  Status: (Auto) Discharged and Closed! 5/10
                  Visit My BKForum Blog: justbroke's Blog

                  I am not an attorney. Any advice provided is not legal advice.

                  Comment


                    #10
                    Okay. Just trying to finalize this in my own mind regarding the facts. This timeline, is based from the initial filing? This would be the Fed. R. Bankr. P.4004(c)?

                    A discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor. Because a chapter 7 discharge is subject to many exceptions, debtors should consult competent legal counsel before filing to discuss the scope of the discharge. Generally, excluding cases that are dismissed or converted, individual debtors receive a discharge in more than 99 percent of chapter 7 cases. In most cases, unless a party in interest files a complaint objecting to the discharge or a motion to extend the time to object, the bankruptcy court will issue a discharge order relatively early in the case – generally, 60 to 90 days after the date first set for the meeting of creditors. Fed. R. Bankr. P. 4004(c).
                    https://www.uscourts.gov/services-fo...kruptcy-basics

                    In 4004(c) it references https://www.law.cornell.edu/uscode/h...7----000-.html

                    I just like to have everything on paper and confirmed in my own mind. When I see "generally" 60 to 90 days and as it pertains to the court that is too broad and vague. Is it 60? Is it 90? When I call and ask for confirm I want to be able to back it up with an email or even old school fax if necessary to reference something. That magic # I can't seem to find.

                    There are so many caveats and redirects. Under 4004(a)
                    (a) Time for Objecting to Discharge; Notice of Time Fixed. In a chapter 7 case, a complaint, or a motion under § 727(a)(8) or (a)(9) of the Code, objecting to the debtor’s discharge shall be filed no later than 60 days after the first date set for the meeting of creditors under § 341(a).

                    So, from initial meeting there are 60 days to object to discharge so is the assumption that 60 days has passed with no objection it can be discharged? Despite the 60-90 range provided under 4004(c)?

                    Summary
                    Official Form 101 for “Voluntary Petition for Individuals Filing for Bankruptcy” filed September 26th, 2019 filed Chapter 7.
                    Under 4004(a) provides 60 days from first meeting of creditors with occurred on 9/26/2019 per the Pacer. No objections were filed.

                    Therefore, tomorrow being November 29th is more than 60 days. 60 days was November 25th, 2019. Given the holidays, <court clerk>, can we expedite this discharge today.

                    Or, perhaps I wait until Monday?

                    Either way, am I on the right track here?

                    Comment


                      #11
                      Rule 4004. Grant or Denial of Discharge

                      Primary tabs

                      (a) Time for Objecting to Discharge; Notice of Time Fixed. In a chapter 7 case, a complaint, or a motion under §727(a)(8) or (a)(9) of the Code, objecting to the debtor's discharge shall be filed no later than 60 days after the first date set for the meeting of creditors under §341(a).

                      Quote
                      No more than 60 days after initial meeting. So therein it has been more than 60 days.

                      Comment


                        #12
                        The FRBP (Federal Rules of Bankruptcy Procedure) are just going to drive you crazy. The simple answer is this. The discharge comes after 60 days have elapsed from the first scheduled date for the 341 Meeting of Creditors. It also sets a bar date which limits the Trustee, United States Trustee (UST), and creditors from filing a complaint to determine dischargeability. That means that once the 60 days have elapsed, the court is compelled to grant the discharge with all due haste. Of course, some courts are more busy than others and there could some other technical reasons why a discharge is not automatically granted on Day 61.

                        I think that you're overthinking this. If you look at your Notice of Bankruptcy, which came out the day you filed (or several days later), it will actually list the last date to file a complaint. This is the controlling date.

                        Your discharge will come as soon as reasonably possible for your county to enter the discharge. With the holidays, I think they are just running a little late. Some courts have "automatic" discharges where the system (CM/ECF a/k/a PACER) will issue the discharge electronically if there are no flags to prevent the discharge.

                        I would simply call tomorrow morning and ask the Clerk of the Bankruptcy court "if" your discharge had been entered since your dischargeability bar date was on Monday, November 25, 2019. They'll answer and let you know exactly when the discharge could happen.

                        Once you have that discharge entered, download it from PACER and give it to the Title Company!

                        You don't need to back it up with anything. These professionals have handled tens of thousands of cases and know what they are doing. They know the procedure. That's why I ask that you not read the FRBP to try to understand how the court functions. Some courts are slower than others, but the code only requires the to enter the discharge with all due haste (given any other circumstances). I have never read that Georgia as being one of the slower districts. California is notorious for being a little slower, but they had a lot more bankruptcies due to the sheer size of California.
                        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                        Status: (Auto) Discharged and Closed! 5/10
                        Visit My BKForum Blog: justbroke's Blog

                        I am not an attorney. Any advice provided is not legal advice.

                        Comment

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