Chapter 7 – Keeping Your Home
If you file a Chapter 7 bankruptcy, the decision on whether or not to allow you to sign a reaffirmation agreement is at the discretion of the creditor holding the mortgage. Some mortgage companies do not enter into reaffirmation agreements; however, they will accept your monthly payment and allow you to live in the home. The problem arises when you have not signed a reaffirmation agreement and you try to refinance or negotiate new terms to the mortgage. The mortgage company may report to the credit reporting agencies that you have bankrupted on the debt owed to them and not report that, notwithstanding you pay your monthly payments regularly, that you are payments are current. That situation will create severe problems for you when attempting to refinance or renegotiate the terms of your mortgage. This situation is particularly troublesome if you have an adjustable rate mortgage ("ARM") or a balloon note which requires you to refinance in several years. The negative credit reporting may make it very difficult, if not impossible, to find a new mortgage company or refinance with the current mortgage holder. The same is true with personal property such as vehicles and household furnishings; however, these items will more than likely be paid for in five or less years and do not present as large a problem assuming you make timely payments. If the finance company makes negative reports to the credit reporting agencies during the time you are making your regular payments and they refuse to report you have paid the debt, you may inform the credit reporting agencies that you have paid and present them with copies of the checks used to make the payments. You may also provide them with a copy of the title you were provided after the completion of your payments. (For the definition of a "reaffirmation agreement" see Reaffirmation Agreements on page 9.)
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Surrendering Your Home. If you chose to surrender your home in the bankruptcy, you need to be aware of the following. When you decide to surrender your home in the bankruptcy, that action does not automatically place the deed to the home in the name of the mortgage company. Until the mortgage company actually goes through the foreclosure procedure as provide by law, you are still the owner of the property and the deed records in the clerk of court's records will still show you as the owner of the property. The mortgage company may take several months before they get around to foreclosing. All the while you are still the record owner of the property. Why do I mention this? This situation can cause you problems with the local code enforcement officers. For instance, if you have moved out of the home and the property falls into disarray and the lawn remains uncut and presents an eyesore to the public, the code enforcement officers may cite and fine you, even though you think you are no longer responsible for the upkeep of the home. I have no solution to this problem! Nor is my representing you in such matters included in my fee. And, there is no way which you or I can make the mortgage company foreclose. They will foreclose when they get around to it. If you maintain and stay in the home until the mortgage company forecloses, you will more than likely enjoy free rent until you are required to leave after the foreclosure. (See below)
Foreclosure of your home. If you are going to surrender your home (let the mortgage company foreclose) the general procedure is as follows: In Georgia if you are going to give up your home for whatever reason, the law requires the mortgage company to go through a prescribed procedure. They must do a foreclosure! So, if you file a bankruptcy you will be sent certain foreclosure documents as required by law. Do not be alarmed. The mortgage company is required to advertise in the local newspaper the foreclosure sale four consecutive weeks immediately prior to the actual foreclosure. They are also required to send you a notice by certified mail of the pending foreclosure. Again, do not be alarmed if you see or hear about the proposed foreclosure sale. All foreclosure sales in Georgia are held at the county courthouse on the first Tuesday of every month unless the first Tuesday is a holiday. In the event the first Tuesday of the month is a holiday, the foreclosure sale will be held on the first day the courthouse opens for business after the Tuesday holiday. Timing of filing your bankruptcy can greatly affect the foreclosure date and the time in which you have to surrender the home.
For instance, if your home is in foreclosure and the advertising has started and if you file the bankruptcy before the foreclosure actually occurs, the foreclosure sale is automatically stopped by law. The mortgage company must get permission from the Court to restart the foreclosure process. The mortgage company will file a motion with the Court to "lift the stay" as it affects the mortgage company. A hearing will be set by the Court. Unless you are notified otherwise by this office, there is no need to attend the hearing if you plan on surrendering the house. This procedure takes about a month or more before the mortgage company can obtain an order. The mortgage company must then start the foreclosure procedure "over again." In other words they must do the four-week advertisement before the foreclosure may take place. What happens after the foreclosure?
After the foreclosure the mortgage company or their attorney will more than likely make a demand on you to move. If you do not move, they will probably file a dispossessory action. If they do so, and you do not remove yourself from the premises within two to four weeks, the sheriff will put your belongings on the street. It is my advice that you move yourself before the sheriff comes. How long do you have to stay in the home after the foreclosure occurs?
I simply cannot give you a definite time period you may remain in the home under any of the circumstances set out above, so please do not ask me. You will just have to play it by ear and use your own best judgment. On rare occasions the mortgage company may contact you and try to work out a deal on a refinance or some other financial arrangement. If you want my advice or assistance in that situation, I will require an additional fee above and beyond the fee I charged for the bankruptcy; otherwise, you are on your own.
Chapter 13 – Keeping Your Home
If you are in a Chapter 13, your house is generally protected from foreclosure, unless you chose to surrender it. A Chapter 13 is often filed to stop foreclosure. In a Chapter 13, if a foreclosure sale is not complete, you may be able to keep your house.
A Chapter 13 plan usually allows for you to repay or catch up your past due mortgage payments over the length of the plan along with your regular monthly mortgage payments, and keep your home.
Chapter 7 - Refinancing and Selling
It is not necessary you get permission to refinance or sell your home from the Chapter 7 trustee. However, prior to the actual closing of the sale or refinancing, you are required to provide the trustee a copy of the sales and closing documents. Depending on the circumstances, you may be required to turn over to the trustee any net proceeds of the sale exclusive of your exemptions. See the example of Selling Your Home below.
Chapter 13 – Refinancing and Selling
Selling Your Home. You must contact the attorney's office in writing and inform them you wish to sell your home and that you have a buyer. Along with your written notification, you must provide a valid sales contract signed by the buyer and provide a good faith HUD-1 Statement. This office will then file a motion to sell with the court. Keep in mind, if the sale of the home produces net cash to you which exceeds your exemption ($10,000 for an individual and $20,000 for a joint filing) after all liens and mortgages are paid, the trustee will want the net cash to fund your plan. For example, if your home sells for $100,000 and after the mortgage and other costs and expenses of sale have been deducted you are to receive $30,000, you and your spouse, if applicable, may each keep $10,000. The trustee will require you pay the rest over to him/her for funding of the plan.
Refinancing Your Home. You must contact the attorney's office in writing requesting the forms required by the Chapter 13 trustee's office to be filled out by you and the financing company. We will mail you the forms. When the forms have been filled out completely, make an appointment to see your attorney for the purposes of reviewing the documents. Remember, the documents will not be sent to the trustee until you have met with the attorney and discussed the documents thoroughly. The attorney will then complete his portion of the form and send the form to the trustee's office. The trustee will either approve or deny the refinancing. Remember, if you are going to take cash out on a refinance, the trustee may require you fund your plan with the cash. Additionally, if your monthly mortgage goes down, the trustee will require that you pay the monthly reduction of your mortgage as an additional plan payment.
NOTE: Your attorney or any personnel in his office will not communicate with anyone other than you in the refinancing or sales process of your home. Please, do not ask the buyer, closing attorney or the sellers or buyer's agents to communicate or send documents to the attorney's office. We simply will not reply to any written communications nor will we return calls from any of those entities. All communications and documents concerning the sale or refinancing of your home will be handled exclusively with you by your attorney's office. Also, depending on the particular circumstances of the sale or refinance, the attorney may require an additional fee for dealing with the sale or refinancing. You are encouraged to consult with your attorney prior to entering into sales or refinancing agreements.
From our office in Lawrenceville, our lawyers represent clients in communities throughout Gwinnett County and Walton County, Georgia. Call us at 770-604-1380 or contact us by email to arrange a free consultation with one of our experienced Lawrenceville bankruptcy lawyers today. At your first meeting, we will determine if you should file for bankruptcy and what information you will need to get started.
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