I feel so stupid about all of this

[demismom]

We're filing Chapter 7, waiting for our attorney to fix our petition after we reviewed it. We're surrendering out rental property and today I got a letter from HFC saying they have programs to help blah blah blah.

We don't want help, we just want to get rid of the house, problem is we're not in a really good area to sell the house quickly.

Are we no longer liable for the taxes and mortgage at this point or if not at what point does that happen? Also, I realize we must keep the property clean, etc and insurance on it. Anything else?

I guess I don't quite understands in Chapter 7 when you surrender a home.

[BassBoy]

Until the loan is foreclosed, house sold at Sheriff's Sale and the title transferred to the lender, you are still responsible for the home. That means, you have to keep it insured and maintain the property taxes if there is no escrow. Just an FYI, I never heard a peep of out anyone about any of these costs. More than likely, your property taxes and insurance are paid in advance, so you may be okay for the year.

[demismom]

WEll, HFC had asked me to fax a copy of the delinquent taxes (they were due to go to sale soon) and then I never heard anything until this letter.

I've been reading about deed in lieu of foreclosure, does that have to take place AFTER you've actually filed, but before discharge or can this be done at any time? I don't want to be stuck with taxes on the balance owed (we're upside down in the hosue), so I'm assuming it needs to be included, right?

[demismom]

I spoke with our attorney's office and was told not to do a deed in lieu of foreclosure because of the tax implications. It might not happen until AFTER the bankruptcy (the sale of the house) and then we wouldn't be able to include the 1099C, they recommended, just riding it out.

[SinkingFast]

Your attny was right.

If you go DIL or Short Sale, you could have tax implications. The IRS views both as if you had sold the house yourself to a buyer. That's not the case if you surrender the house in BK.

If you were in a case where you owned the property for a long time or saw enormous appreciation during the time you owned the property, then you could have significant Capital Gains to consider.

I don't know what your liability is as far as the property taxes. Hopefully, your attny advised you there.

I do know when we were Consulting around, all the attnys wanted to be sure we had insurance on the house. As long as our name was on the Deed/Title, we could be held liable if someone hurt themselves on our property.

[demismom]

SF - the attorney told us that once the Mortgage company "takes possession" of the house we are liable for the property tax, which I guess means AFTER foreclosure? I don't have the money, so what happens then? I assume it goes to sheriff sale, right? Man, you'd think I should know all this with all the research I've done.

Then today our renters told us for second week in a row no rent AND he got laid off, SHE doesn't work, so we're SOL there. I'd counted on that money for my daughter's fillings.