Collecting Rents After Filing A Chapter 7 - A Must Read

[ryan44]

yeah they actually modded my first loan then discharged my second loan. Then I filed and after my BK closed USBANK called me and said "hey what do you want to do with the property" I said well what are my options. They said hey the second is a 50k lean against the property but if you stay current on the first mortgage you can keep it out of forclosure. I did this for about 4 months but then decided this isn't in my best interest. Now since I stop paying they are demending a pay the mortgage since I have rents.. I said...wait a sec...you can ask me for payment...this was included in my BK and its against the law...USbank got real nasty and said since I have renters I HAVE TO PAY THEM....I just hung up.

[scooter6251]

Interesting enough USBANK calls me and says since I have renters in the property I have to make the mortgage payments. Not sure what to think of that but I'm pretty sure I can collect the rents as my lawyer said so specifically. I don't think making a few payments changes anything as I did NOT reaffirm the debt with USBANK.

Isn't it interesting what seems to get the bank's attention. You can beg them to foreclosure and they don't listen. But if they think you're making a buck or 2, they go nuts. We are moving so will do the same as you, rent until they foreclose. How long we collect rent is up to them. I'm no longer in a hurry. Good luck

[ryan44]

I have a rental that I have been collecting rents from before and after by Ch7 BK closed. My lawyer told me as long as the trustee doesn't ask for those rents as part of the estate then i get to collect them until the property is foreclosed. He said in most cases they don't as if they DO then they have to manage the property. My trustee didn't mention anything at the 341 meeting and I have been collecting rents ever since. Almost 6 months after my BK closed. I did start paying again on this loan for a short while to keep it out of foreclosure but recently stop making payment and just want this property to go into foreclosure. Interesting enough USBANK calls me and says since I have renters in the property I have to make the mortgage payments. Not sure what to think of that but I'm pretty sure I can collect the rents as my lawyer said so specifically. I don't think making a few payments changes anything as I did NOT reaffirm the debt with USBANK.

[StrawberrySu]

Su,
I wonder how the trustee would know if if there was a caretaker or even a paying renter in the house, a house that is headed to foreclosure?

Well, depending on if I am able to file Non-consumer chapter 7, I may have the renters paying up until a few months prior to bk filing. So the trustee would see on my bank statements that there had been renters. I probably won't volunteer anything about it, but if asked directly if they are rented, I could safely say no. But if asked if anyone lived there I would say yes cause I am afraid of perjury! Which I don't know if he would even ask, given that they aren't rented. The homes are all in Ohio and I will be filing in North Carolina, so while it may be worth his while to send an investigator by if they were local homes, maybe not so much being states away.

[scooter6251]

They would ask at the 341 meeting.

The properties would be listed on the petition, it would not be unusual for the trustee to ask about the current occupancy of the properties.

Thanks and I understand that, except in my case, I have been discharged, but not closed.

[HHM]

They would ask at the 341 meeting.

The properties would be listed on the petition, it would not be unusual for the trustee to ask about the current occupancy of the properties.

[scooter6251]

Su,
I wonder how the trustee would know if if there was a caretaker or even a paying renter in the house, a house that is headed to foreclosure?

[StrawberrySu]

The trustee could contact the care takers and give them 30 day notice (or whatever is required in your state fore eviction) or charge them rent. Again, unlikely, but a possibility. If the properties are headed to foreclosure, then unlikely.

Thanks for all your advice, I hadn't thought of that, will apprise whoever I am leaving in homes of that possiblilty!

[HHM]

The trustee could contact the care takers and give them 30 day notice (or whatever is required in your state for eviction) or charge them rent. Again, unlikely, but a possibility. If the properties are headed to foreclosure, then unlikely.

[StrawberrySu]

Not quite sure what you are asking. In the extreme, if the properties are not rented, the trustee could just take them and rent the properties for the benefit of your creditors (unlikely, but a legal possibility).

The properties would be occupied, by essentially care takers, so they could be maintained, since we will be in another state, the care takers would be responsible for minor repairs, lawn care, utilities, but not pat actual rent. Since we are responsible until they are foreclosed on, and have to carry insurance on them, we don't want to leave them empty.

[HHM]

So if by the time we file our properties are "house sitter" status, no income coming in, it should be smooth sailing?

Not quite sure what you are asking. In the extreme, if the properties are not rented, the trustee could just take them and rent the properties for the benefit of your creditors (unlikely, but a legal possibility).

[StrawberrySu]

Yep, that is what happens. So long as there are assets to distribute in a case, the case stays open.

So if by the time we file our properties are "house sitter" status, no income coming in, it should be smooth sailing?

[despritfreya]

The most conservative approach would be to wait until closing of your Bk before doing so. . . Strictly speaking, ALL property is property of the estate until the case closes. It's just that exempt property cannot be liquidated. However, the debtor does not have 100% legal control over exempt property while a BK case is pending.

Very good point.

Des.

[HHM]

Thats my question as well, what happens to rents after your Chapter 7 closes? And, will your closing be held up (not close in the usual amount of time) if there are rents? I seem to recall a post awhile back where someone said the trustee was using the rents to pay off their unsecured creditors and not closing/discharging?

Yep, that is what happens. So long as there are assets to distribute in a case, the case stays open.

[HHM]

Excellent post. Thanks for time spent researching this info. Please clarify this situation: Discharged (not yet closed due to asset, automobile, which has been sold at auction) from Chapter 7, did not reaffirm the current residence, want to leave the area. If I rent it until foreclosure happens, who gets the rent?

The most conservative approach would be to wait until closing of your Bk before doing so.

However, if the property was exempt at the time of filing, then if you convert it to non-exempt property after filing, there should not be an issue, but it is more risky if there is an aggressive trustee.

Strictly speaking, ALL property is property of the estate until the case closes. It's just that exempt property cannot be liquidated. However, the debtor does not have 100% legal control over exempt property while a BK case is pending.