Filing Chapter 7 with only 1 asset but no unsecured debt?

[dp0127]

Hello, here is my question, i know a lady that filed for bankruptcy but her only asset is her house and has no unsecured debt, she wants to surrender the property within the bankruptcy, does anyone know if the trustee will say something at the meeting because there is no debt to discharge but only the house to surrender?

[falken]

The house is the debt she wants to discharge. I assume its worth less than she owes on it (otherwise my guess is she would sell it).

If she qualifies for a chapter 7 there is nothing wrong with only having 1 secured debt and no unsecured.

[dp0127]

wouldn't the trustee ask why is it that she filed for bankruptcy if she can just let the house go on foreclosure?

[poorold]

yeah, foreclosure is not only free, but she can live rent free till they make her move. bk is worse.

[pcn]

And while she is waiting for it to foreclose, she could live it up on credit, and then do the ch7...
NO. Of course I dont really mean that. Probably just a reaction thinking about all the things we should have/could have done if we had known we'd end up here.

[keepmine]

wouldn't the trustee ask why is it that she filed for bankruptcy if she can just let the house go on foreclosure?

Thing is, she may well be responsible for a deficency balance after foreclosure. That's why a bk may be necessary.

[falken]

No one is going to ask why you are filing BK when you could have just stopped paying...

That being said... I would just wait out the forclosure or try to work out a deed in lieu or a short sale with the bank. Wait until you have a judgement agianst you for the deficency before you file for BK.

[dp0127]

well, as it comes out, she filed for bk because she had an upcoming trustee sale and wanted to protect her property to see if she could come to an agreement with the bank for a loan mod, but now she decided to let the house go, and since shes in bk might as well surrender it there, but shes afraid that the trustee might say something because she has no unsecured debt.

[falken]

Honestly, she would get the least attention. Lady needing to get out of a house she can't afford and has no other debt.
She should sail right on through.

If she didn't go the BK route she could be sued for any difference between what the bank sells the house for and what she owes (plus foreclosure and legal fees). People file BK every day to stop a home foreclosure, there is nothing wrong or illegal about that whether you want to keep the house or not.