Post-Bankruptcy Question Re: House

[Annika]

My husband and I filed bankruptcy this past December. Discharge received 3/31. We almost had an issue with keeping the house, since technically we had a little more equity than we were allowed, but according to the PACER information, the trustee abandoned all property and closed the case on 7/5. Big Whew!

The house needs a LOT of work, which the trustee took into consideration, and is probably what saved it.

My question is: Are now we free to sell our house, if we choose to do so?

We'd like to fix the house back up and sell it, and buy (outright) a smaller house with the money that's left after payoff. It'll probably take at least 6 months to get the money together to fix everything, and to find time to actually DO the repairs. DH can do most of the work himself, thank goodness, to keep the cost down. In other words, it won't be anytime in the immediate future, but probably within 6 months or so. The leftover money won't be much, and the "new" house probably won't be much either (LOL!).

The main reason we're considering selling our house is because I'm partially disabled (bad knee), and we live on a steep hill. I can't get in and out of the house or go downstairs without assistance.

I guess I'm just worried that the trustee might somehow see the house selling for more than the fair market value (he sent a real estate guy to look at it), and will try to take part of the money after the sale, or something.

Does "case closed" REALLY mean "closed"?

Edited to add: We still haven't signed the reaffirmation papers on the house. Don't know what's up with that. (??) I've been making the payments as scheduled. It might have something to do with the mortgage being taken over by another company. They changed over right at the time all the final paperwork was being handled. The transfer is mentioned on PACER, so it appears that all is in order (I hope?).

[StaciMM]

1. If you didn't sign reaffirmation before discharge, you can't now.

2. I would imagine you're clear. However, I've also heard that the trustee has 1 year to reopen your BK case. If this is true, then waiting until the 1 year is up wouldn't be a bad idea-and by the time you're done it will be about a year past close and more than a year since discharge.

[Annika]

Okay, thanks!

Can you clarify this (below) further? Not sure I understand.

1. If you didn't sign reaffirmation before discharge, you can't now.

We did sign reaffirmation papers on the truck (we only had 2 payments left), but never heard anything else about the house. It was only until I learned about PACER a few weeks ago that I found that the property had been abandoned and that the case had been closed. Did you happen to read the part on PACER where the mortgage company apparently transferred our account? (link in first post) If so, does that somehow take the place of signing the reaffirmation papers? (very confused)

Thanks for your help.

ETA: I just re-read my first post and it kind of sounds funny. We bought the house in our early 20's, and I fell and hurt my knee several years afterwards. We, of course, didn't know that ahead of time, or we would've looked for a house on more level land, with no steps.

[StaciMM]

Reaffirming has to be done before the BK is discharged. Since you didn't reaffirm on the house, it means that you could stop paying, move out at some point before they booted you out, and they would be unable to pursue you for the balance due because the debt was discharged in your BK. Since you're making your payments, though, you're keeping the house.

If you aren't already, start keeping very good records of your payments-as the mortgage company may not be able to verify them.

Technically, if you decided not to bother w/ the repairs, you could save your repair money & mortgage payments to use to put into buying another house. Of course, I have no clue how long the process would take for the mortgage company to take the house back-so that may not be in your best interest.

The only benefit of reaffirming is that it generally allows the account to report your after BK payments on your credit report. It also means you give up your BK protection on that debt, so its not always a good idea.

[Annika]

Ah, I see. Thanks so much.

And yep, I have copies of all my canceled checks where I've paid the house payments, just in case.

[StaciMM]

Good! You may need them when it comes time for applying for a new mortgage. If you haven't already, get copies of your credit reports-make sure everything from the BK shows a $0 balance. Mistakes can hurt your credit score, and hurt your interest rate on your mortgage.

[Annika]

Thanks, Staci! Hopefully our next home can be paid-for upfront with the money left from paying our current home off. Got our fingers crossed, anyway. It's just the two of us, so we can downsize somewhat without really affecting anything. (Gotta have two bathrooms, though, regardless! LOL!)

I'll get copies of our credit reports soon. Almost scared to look at them.