Not paying mortgage, possible divorce, tax penalties discharged and other questions

[flashoflight]

If you go pro se and when it goes bad:

1) You cannot withdraw out of the chapter 7, especially since the trustee will have a payday with the non-exempt equity.

2) Your case will pique the interest of the trustee and he will take every last non-exempt dime from you even if it takes years (8 months is certainly not a problem) vs. the other $70 simple pro se no asset chapter 7 that he processes in a few minutes. He will hire his own law firm out to pursue your non-exempt money and rack up legal fees. The trustee is an adversary who will have a payday at your expense and will not help you. Since you are not represented, it will be even easier for him.

3) Many/most BK lawyers will not take somebody else's case including pro se at any price. If they do, they will charge you a lot more than if let them prepare the initial bankruptcy petition.

Pro se/Upsolve is great for simple chapter 7 cases. Your case is not even close to fitting that definition. Since you are not making housing payments, perhaps those funds can be redeployed to pay for a lawyer. Most people use the funds that would be spent on monthly debt payments to raise the funds for a lawyer.

[justbroke]

I've think I've finally made the decision to let my house go. Due to a lawsuit against my former mortgage servicer and my stubbornness, I have not made a mortgage payment in over a year. No one is trying to foreclose and I have a lot of equity. I want a true fresh start and not the uncertainty of a chapter 13 long term plan, not when my marriage is rocky and my job may not be stable.

While Chapter 13s can be successful, I do see the merits of wanting the quicker Chapter 7 discharge. I've done both.

Since we're not paying the mortgage, what do we put on the schedules?

Well, your Means Test would be what your normal PITI (principal, interest, tax and insurance) payment. You Schedule I/J could be more difficult. I will explain at the end of this response.

If he is not paying his debts, will I still get to reduce his income contributions to me by what he actually owes including joint tax debt?

Marital income for a single filer is included and then only reduced by the non-filing spouse's actual debt payments. Tax debt is tricky and some Chapter 13 Trustees will allocate based on contribution. It can be difficult to navigate with non-filing spouses.

If I could get a forebearance or loan modification in advance, would that help me at all?

A real modification may be the better situation especially for a Chapter 7. See my explanation at the end of this response.

Finally, if we can protect $43,000 in equity exemptions in a Chapter 7, does this mean the trustee writes us a check for that amount plus the amount of other exemptions once the home sale?

The Trustee would only give you the proceeds of the sale for the equity in the home itself. Not for any other property... unless the Trustee is also liquidating other property for which you have only partial exemptions.

The only other complication in this case is that I'm expecting an inheritance, I hold a 30% interest in a property worth about $120,000. That situation is also complicated but the probate attorney said that he didn't think we'd be out of probate in 8 months, and me getting anything hinges on my brother being able to buy me out of the property so I will have to argue that it's too far in the future to make me wait to get relief. Not sure what that is called. Anyone got similar caselaw in Georgia to share?

That's is not a good argument in bankruptcy. You don't actually "wait" for relief since the bankruptcy filing itself provides relief, and the discharge comes regardless of the administration (liquidation) of the case. In other words, the "relief" is the discharge and that comes after the 60-day mark from your 341 Meeting regardless of the Trustee's other actions to liquidate the estate.

Also, remember that the bankruptcy Trustee "steps into the shoes" of the debtor. If you could force a sale, so could the Trustee. The Trustee actually likes future payouts and a Chapter 7 can stay open for years. We had a forum member that had a case open for nearly 4 years. Chapter 7 Trustees will wait out a probate case and even inject themselves into the case because they wield some extraordinary powers.

See also my other post. Since I'm thinking of filing a chapter 7 now, I may do it pro se. The only other complication is that we sold a business in October 2019 at a loss. I plan to wait the 6 months before filing so looking at April, after we file taxes that we can't afford to pay again.

On this one, I don't recommend doing anything Pro Se. You have real property and equity and you need to know the system. I hardly ever recommend going Pro Se when there is property at stake.

Here's the bottom line. You would have difficulty liquidating the home and still trying to file a Chapter 7. This is because you would not be able to show those payments on your Schedule I/J. You may be able to list the Mortgage/Rent amount for your county in your State, but that may not be enough to prevent a Chapter 7 filing from being an abuse and subject to dismissal or conversion.

Hence, this is why I don't think that you should file Pro Se. You have complexities in your case and you have unprotected equity. An attorney would navigate these waters much better than I can.

[womanonfire]

I've think I've finally made the decision to let my house go. Due to a lawsuit against my former mortgage servicer and my stubbornness, I have not made a mortgage payment in over a year. No one is trying to foreclose and I have a lot of equity. I want a true fresh start and not the uncertainty of a chapter 13 long term plan, not when my marriage is rocky and my job may not be stable.

My husband and I never really wanted to look at a Chapter 7 because we wanted to keep the house but we're looking at a possible divorce now after we file and my chapter 7 is discharged.

Since we're not paying the mortgage, what do we put on the schedules? If he is not paying his debts, will I still get to reduce his income contributions to me by what he actually owes including joint tax debt? If I could get a forebearance or loan modification in advance, would that help me at all? If I want to lose the house, I don't see how it would. I can spend my mortgage payments willy nilly or start socking money away in a Roth.

Because of the lawsuit with former mortgage servicer, I have rights of recoupment and set off. The problem is that I ultimately owe the debt to Fannie Mae. My plan is to hold them vicariously liable for previous mortgage servicer.

Finally, if we can protect $43,000 in equity exemptions in a Chapter 7, does this mean the trustee writes us a check for that amount plus the amount of other exemptions once the home sale?

The only other complication in this case is that I'm expecting an inheritance, I hold a 30% interest in a property worth about $120,000. That situation is also complicated but the probate attorney said that he didn't think we'd be out of probate in 8 months, and me getting anything hinges on my brother being able to buy me out of the property so I will have to argue that it's too far in the future to make me wait to get relief. Not sure what that is called. Anyone got similar caselaw in Georgia to share?

See also my other post. Since I'm thinking of filing a chapter 7 now, I may do it pro se. The only other complication is that we sold a business in October 2019 at a loss. I plan to wait the 6 months before filing so looking at April, after we file taxes that we can't afford to pay again.