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  1. #1

    Default How to Keep a House After Not Reaffirming in Chapter 7 Bankruptcy

    My question involves bankruptcy in the state of: Tennessee

    I filed Chapter 7 and did not reaffirm the house. The trustee and lienholder agreed by court order that the trustee had 120 days to attempt to sell the house. If the trustee was unable to sell the house in 120 days the lienholder could foreclose, but all proceeds over the lien amount would go to the trustee.

    I agreed to lower my exemption to $10,000.

    In a few days the 120 day period will come to an end.

    I have a friend willing to loan me money to catch up on the house payments.

    I contacted the bankruptcy lawyer and he said it was fine if after the 120 day period I could catch up payments and the lienholder, but I think that advice may be wrong. I think the property has to be abandoned by the trustee. The court order states that the trustee receives any amount over the lien amount in a foreclosure sale. I am concerned that if I pay the lienholder the back due payments the trustee could swoop in and sell the house for less, or if I attempt to sell the house after a year or two the trustee could come back and take the proceeds above the lien amount.

    Do I have anything to worry about by taking a loan and paying back payments? Do I need an order abandoning the property before making any payment? Any ideas?

  2. #2
    Join Date
    Sep 2011
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    OH10
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    Default Re: Ch. 7 Non Reaffirmation How Do I Keep the House Now

    They still have a lien on the house. No one knows whether the market value gives you equity or not.

  3. #3

    Default Re: Ch. 7 Non Reaffirmation How Do I Keep the House Now

    Quote Quoting Disagreeable
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    They still have a lien on the house. No one knows whether the market value gives you equity or not.
    Yes, the lienholder has a lien, I do not think they can foreclose if the payments are current. I am worried about what happens with the equity if I sell next year. Or what happens if the trustee decides to try to get the court to allow her to sell the house again if I paid the lienholder $20k and lowered the lien amount.

    The trustee is attempting to sell the house for $350k. I owe $260K. I would owe $240k after paying $20k to the lienholder. I have $10k in an agreed homestead exemption.

  4. #4
    Join Date
    Sep 2010
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    478

    Default Re: Ch. 7 Non Reaffirmation How Do I Keep the House Now

    The trustee and lienholder agreed by court order that the trustee had 120 days to attempt to sell the house. If the trustee was unable to sell the house in 120 days the lienholder could foreclose, but all proceeds over the lien amount would go to the trustee.
    If the above is exactly what the court order states go back to your attny and ask him where it states that, without the abandonment, it is fine for you to sink $$ into the home to stop the foreclosure. Ask him where it states that the bk estate gives up its rights if the debtor cures the default under state law and, therefore ends the lender’s ability to foreclose?

    You have an unusual situation and you need to make sure you fully understand what can and cannot happen. We, on the Internet, cannot give you concise answers since we do not know the whole story.

    Des.

  5. #5
    Join Date
    Jan 2006
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    38,867

    Default Re: Ch. 7 Non Reaffirmation How Do I Keep the House Now

    Quote Quoting teacher94565
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    The trustee is attempting to sell the house for $350k. I owe $260K. I would owe $240k after paying $20k to the lienholder. I have $10k in an agreed homestead exemption.
    my question is:

    where would you be getting this $20K and is the trustee aware you have this $20K laying around?

  6. #6

    Default Re: Ch. 7 Non Reaffirmation How Do I Keep the House Now

    Quote Quoting teacher94565
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    I have a friend willing to loan me money to catch up on the house payments.
    Quote Quoting jk
    View Post
    my question is:

    where would you be getting this $20K and is the trustee aware you have this $20K laying around?
    The first post clearly states where the money would come from. I've been unemployed for about 15 months and the bankruptcy was discharged about 6 months ago. I've been living in a house and have not been making any payments for about 10 months.

    However, if I had been reemployed the day after I filed bankruptcy I would easily have earned $40k or more and without a house payment I could have saved at least 1/2 of that amount and had $20k cash to pay the back due payments.

    "IT IS THEREFORE ORDERED that (i) the motion to modify the 11 U.S.C. § 362 automatic stay filed by Movant be conditionally denied, and that the automatic stay remains in place, in order to provide the Trustee an opportunity to sell the Property; (ii) that Trustee be permitted 120 days from the entry of this order to conduct the sale of the property and satisfy movant’s mortgage balance; (iii) that if the Trustee cannot sell the Property within the aforementioned time period, the Movant shall immediately be granted relief from stay and the property abandoned from the estate without any further hearing or filing and any funds produced from a sale of property in excess of liens shall be turned over to the Trustee."

  7. #7
    Join Date
    Jan 2006
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    38,867

    Default Re: Ch. 7 Non Reaffirmation How Do I Keep the House Now

    Yes, it does. Where is the second question answered?


    you apparently missed the point of my questions altogether. Just let your attorney know what is going on so he can keep you out of trouble with the trustee.

  8. #8
    Join Date
    Sep 2011
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    OH10
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    Default Re: Ch. 7 Non Reaffirmation How Do I Keep the House Now

    If the payments are current they have no reason to foreclose. Once the case is discharged the trustee cannot sell the house. If the court ordered the equity to be paid to creditors whenever the house is sold, the order should be filed to cloud the title so that whether you sell now or in 50 years, the equity goes to the creditors.

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