Forum Rules (Everyone Must Read!!!) (updated: 04/28/2015)

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Property insurance and tax question.....

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  • Property insurance and tax question.....

    Hello all. I am currently 3 months behind on my mortgage and plan on letting the house go. My attorney has told me it will be at least another six months before I will have to vacate the property and probably longer.

    My mortgage payment includes an escrow for property tax and Homeowners insurance. I don't plan to pay the mortgage because I am going to file a chapter 7 and can't afford the home any longer.

    My question is this: I don't feel comfortable with no insurance and I don't want trouble for failure to pay taxes. Is it advisable to get another company to insure the property and pay the taxes seperately each month?

    Will a company still insure a place I am not paying the note on?

    Thanks for any responses.

  • #2
    The taxes due will attach to the land. The county puts a lien on the house for unpaid taxes. They become the bank's problem. You are not personally liable. No need to pay those. This is true whether you file bk or not.

    You can get a renter's insurance for your stuff. The bank will pay to insure the building. Any liability for lender placed insurance will be discharged with the bankruptcy. So if they send you a bill, don't pay it.
    There are two secrets for success in life:
    1.) Never tell everything you know.


    • #3
      Originally posted by debee View Post
      The taxes due will attach to the land. The county puts a lien on the house for unpaid taxes. They become the bank's problem. You are not personally liable. No need to pay those. This is true whether you file bk or not.

      You can get a renter's insurance for your stuff. The bank will pay to insure the building. Any liability for lender placed insurance will be discharged with the bankruptcy. So if they send you a bill, don't pay it.

      Thank you for the wonderful and thourough response.

      I just found out that my mortgage servicer paid my insurance in full for six months so I guess that is taken care of too.

      One more question though: I stopped paying my mortgage in November. When I do my taxes do I deduct what was paid in property tax and interest without the last two months in the figure? I certainly don't want IRS trouble.


      • #4
        You should still receive tax documents from your lender and they will be correct for tax deductions. If your property taxes were paid for 2010 you should use the amount paid. If 2010 has gone unpaid then you can't claim it. The bill coming due should be for 2011, which you don't plan to pay so you won't get that deduction next year.

        I'm not sure what to tell you about the insurance. Mine is paid through July and I'm hoping to be out of the property before then. From what my attorney says, it may take longer than that for the bank to foreclose.
        Stopped paying 8/2010, Filed 2/2011, 341 3/2011 done, Report of no distribution . . . Discharged & Closed 5/2011!


        • #5
          Similar situation. Quit paying in 8/10. Cpt 7 Discharge 10/11. Final Decree 11/15. Deducted MTG. interest paid in mortage report. Will save & stay until kicked out. No remorse, a business decision.When I refied this place (26 yrs here) the rate jumped 4% pts. but felt over a barrel at that point. After all the collection calls etc. we are kind of numb and resolved to be impervious to the attacks. The discharge seems unbelievable (Good) to us after all the trauma (financial) we have been through the years. I believe God cares not about money. Via con Dios.


          • #6
            Sorry for not getting back to this thread & your question. Oversight caused by household in perpetual chaos. I agree with October99 though. You'll get the 1098 and have your info then. Good luck to you.
            There are two secrets for success in life:
            1.) Never tell everything you know.


            • #7
              I too stopped paying my mortgage mid-last year and that included my escrow. So the mortgage company took care of that. I got a bill due in a week for earthquake and have not paid this either. I know my name is still on the note, so this may be risky. I honestly don't care about my personal items being destroyed, but am a little nervous if there is an earthquake if I could in any way be held liable to the mortgage company for the damage to the house. Since I did not reaffirm the house, I know I will be kicked out eventually. I am however trying to do a loan mod to stay in the house. If they say yes, then I will continue paying taxes and insurance, if they say no, then the heck with paying any of that.


              • #8
                When insurance payments are escrowed, the lender pays/renews the policy for the homeowner. If the homeowner stops paying, the lender will place a new policy into effect (that does not protect the homeowner) when the homeowner's policy expires. So I don't think you have to worry about earthquakes. If they want earthquake coverage, they'll get some.
                There are two secrets for success in life:
                1.) Never tell everything you know.


                • #9
                  Per the tac question-only the taxes that got paid out of escrow are deductible-use the number on the 1098 bank sent you or will send you. Depending on how your state treats prop taxes for 2010 you should get credit for a whole year if the escrow paid out taxes semi-annually.


                  • #10
                    I quit paying in June and because of that I did not get the exemption. Considering that I haven't paid for so long, I think it's pretty even. I did not receive notification from my insurance and bank is paying that along with the taxes (I assume they are paying taxes as I'm not). I did receive the 1098, it just wasn't large enough for me to get the exemption.


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