Do I give up everything when I file a suggestion of bankruptcy?

[DecentHuman]

I just received summary judgments of foreclosure on six houses. The sale date is January 22nd.

I want to file bankruptcy in February after collecting February rents, getting caught up on certain mortgages, taxes, and bills.

I would like to delay the foreclosure auctions just long enough so the foreclosures go on public record in rem instead of in personam (against the property instead of against me,) so I was thinking about filing a suggestion of bankruptcy on January 21st. Then I'd have til February 7th or so to file the rest of the bankruptcy paperwork.

The question is, once I file the suggestion of bankruptcy, at that point do I give up all my assets and income to the bankruptcy estate, or not until I file the rest of the bankruptcy case?

Thanks

[JRScott]

If the properties are in foreclosure then you are being dishonest in still collecting rent from properties you have not paid the mortgages on. The only way you could stop the sale date would be to file prior to that date, a suggestion of bankruptcy will not prevent it.

Most property is surrendered at or shortly after the 341 meeting.. However rental income would go to the trustee after filing I believe since the properties are then part of the bankruptcy estate.

[DecentHuman]

a suggestion of bankruptcy will not prevent it.

In Florida my attorneys have said a suggestion of bankruptcy will immediately prevent foreclosure.

If the properties are in foreclosure then you are being dishonest in still collecting rent from properties you have not paid the mortgages on.

Are you making a legal or moral point?

rental income would go to the trustee after filing I believe since the properties are then part of the bankruptcy estate.

From what I've read the rental income would probably go to the trustee only until she abandons interest in the rentals because they have no equity and therefore can not be sold to disburse the proceeds. Once she abandons interest, the rents will revert to me until the properties foreclose.

I'm just not sure at which time they go to her; I think it must be when I file my list of assets, which I guess is not when filing the suggestion of bankruptcy but when filing the full paperwork.

[JRScott]

You'd most likely be violating both, I'm not an expert on Florida tenant law.

However it is reasonable to assume if the bank comes and changes the locks thus denying the tenant access then you would be violating. 83.67 (2) of the Florida Civil Code. In addition collecting rent on a property you know to be in foreclosure probably violates 83.44 the Good Faith clause of Tenant law in Florida.

[DecentHuman]

You'd most likely be violating both, I'm not an expert on Florida tenant law.

However it is reasonable to assume if the bank comes and changes the locks thus denying the tenant access then you would be violating. 83.67 (2) of the Florida Civil Code. In addition collecting rent on a property you know to be in foreclosure probably violates 83.44 the Good Faith clause of Tenant law in Florida.

JRScott, is it possible you have a personal objection and are trying to find laws to justify your view? This is like saying it is wrong to continue working a job if you're not paying your bills, or it's wrong to continue living in your house if you're getting foreclosed upon. We all got in bankruptcy forum with our own stories and reasons, so it would seem improper for any of us to judge anyone else without the benefit of knowing their story and walking in their shoes.

Being a landlord is my job. Believe it or not, the banks are extremely grateful that I continue doing my job while I'm in default on my loans. They would MUCH rather have the place have tenants in it, utilities on, lawn mowed, repairs being made, and landlord watching over the place than have it sitting vacant and vulnerable to vandals. In fact, the first question they ask every time we speak on the phone is whether the home is occupied and/or secured, and if it's vacant, they freak out, run over there and do all types of things to secure the property.

The bank can't change the locks when they foreclose, due to the Protecting Tenants at Foreclosure Act, a very simple one page act: http://www.nlihc.org/doc/701-704-Public-Law-111-22.pdf. Here is a great layperson's article explaining it: http://www.stablecommunities.org/lib...oreclosure-act.

Basically, tenants have the right to stay until the end of their lease, unless the entity taking over the home is moving in, in which case the tenant gets a 90 day notice to move. I just rented a home to tenants and told them straightforwardly that I am behind on the mortgage and the home will probably go into foreclosure during the term of their lease. I had them sign a disclosure to that effect, and gave them a copy of the Protecting Tenants at Foreclosure Act. I am extremely concerned with acting in integrity.

Unfortunately, there's a lot that's not pretty about this economy. Before I found myself in Bankruptcy Forum, I had a blemish-free credit report with 47 accounts in perfect standing. The bank's remedy for failure to pay the mortgage is foreclosure. If they so choose, they are also able to exercise an "assignment of rents" clause in the mortgage, though they rarely do, because they are happy to let us continue collecting rent and managing the property until they own it.

[JRScott]

What your doing is unethical.

You are collecting monies with full knowledge you haven't paid the mortgages on the property and they'll be foreclosed on starting next month. To me that would violate at the very least the Good Faith clause of Tenant Law because any rental agreement you made at least in the last 4 months you've not been paying the mortgage was made in bad faith. Possibly longer depending how long you've been aware of the situation.

I'll ask you what the Trustee is going to ask you, since you've not been paying the mortgage where has the rent payments gone?

[DecentHuman]

since you've not been paying the mortgage where has the rent payments gone?

Mortgages, taxes, insurance, utilities, repairs, rents - the things it takes to run a business. The bills have not stopped. If the money coming in equaled the bills, I wouldn't be here, would I?

JRScott, I think it's hilarious that you see fit to judge. Perhaps you missed your calling and you should have been a bankruptcy judge. Obviously you've never been a landlord.

Clearly you are unwilling to let any of my points permeate. How are my rental agreements in bad faith if I disclose to the tenants the situation? I am still giving them the premises in exchange for the rent, same as ever, and they are protected from eviction by the Act.

Moreover, what exactly is it you propose I do?
A) Let all the properties go vacant because I can't afford to pay the mortgages? Contribute to crime, delinquency of neighborhoods, declining property values and bank losses?
B) Send all the rent money from each respective house to each respective lender, rather than preserving some houses and letting others go?
C) Use a formula that will satisfy JRScott's ethics while causing me to starve? Sorry, I went down that road last year before submitting to bk prep, and I'm glad our country has this alternative.

Your turn, since you weren't paying your bills, what did you do with your money before you declared bankruptcy?

[AngelinaCatHub]

Mortgages, taxes, insurance, utilities, repairs, rents - the things it takes to run a business. The bills have not stopped. If the money coming in equaled the bills, I wouldn't be here, would I?

JRScott, I think it's hilarious that you see fit to judge. Perhaps you missed your calling and you should have been a bankruptcy judge. Obviously you've never been a landlord. This is not a necessary complaint. JRScott and all others are here to give you advice, experience shared, and opinion. No one came on to you caustically. This is not a legal service, only a community of people with quite a bit of experience after hours of reading and research for others.

Clearly you are unwilling to let any of my points permeate. How are my rental agreements in bad faith if I disclose to the tenants the situation? I am still giving them the premises in exchange for the rent, same as ever, and they are protected from eviction by the Act. It is MY opinion that if you are not intending to redeem your mortgage, you have abandoned the real estate. The rent should go to the mortgage holder unless you get a managerial agreement in writing from them to use their money, or let them manage it themselves.

Moreover, what exactly is it you propose I do?
A) Let all the properties go vacant because I can't afford to pay the mortgages? Contribute to crime, delinquency of neighborhoods, declining property values and bank losses? You already have by not paying your mortgage. The only difference is the time has not played out.
B) Send all the rent money from each respective house to each respective lender, rather than preserving some houses and letting others go? You mentioned above that you made no money yet with the residual rents you are paying on other houses?
C) Use a formula that will satisfy JRScott's ethics while causing me to starve? Sorry, I went down that road last year before submitting to bk prep, and I'm glad our country has this alternative. Again, not a necessary remark by attacking a posters opinion. If you ask a question, and then argue the answer, why ask the question at all. You get opinions here, that is all.

Your turn, since you weren't paying your bills, what did you do with your money before you declared bankruptcy?

Most people who declare bankruptcy never intend to do so. Some thing that piles up becomes a last straw, such as job loss, or health. That triggers the decision to bk. Once bk, you don't have any money. The estate does and you best use it in a legal way. After filing you certainly don't go out and buy a 5K HDTV, you buy clothes, food, fuel, and other necessities. This is legal, the TV is not.

I have no axe to grind. This is my opinion only. Take it as that. 'Hub

[frogger]

I'll ask you what the Trustee is going to ask you, since you've not been paying the mortgage where has the rent payments gone?

The trustee is not only going to ask you this, but is probably going to ask you for the money too.

[music12]

well, first, i didn't read all the postings above, just the first couple.

a "suggestion of bankruptcy" in the sense the OP is thinking does not exist. either you file for bk or not. after you file, you can forward a copy of the notice to anybody you want to know about it immediately or that's not already on your matrix. the fact that you may complete most of your paperwork 15 days after you file does not turn the filing into a "suggestion." your date of filing willl be january 21, not any date in february. the bankruptcy estate is formed automatically on january 21 regardless of whether your paperwork is complete or whether the trustee already knows what's in the estate. in fact, if you fail to include something in your paperwork, it's still automatically a property of the estate, and when the time comes and the trustee finds out that it was omitted, the trustee can come get it.

[AngelinaCatHub]

well, first, i didn't read all the postings above, just the first couple.

a "suggestion of bankruptcy" in the sense the OP is thinking does not exist. either you file for bk or not. after you file, you can forward a copy of the notice to anybody you want to know about it immediately and that's not already on your matrix. the fact that you may complete most of your paperwork 15 days after you file does not turn the filing into a "suggestion." your date of filing willl be january 21, not any date in february. the bankruptcy estate is formed automatically on january 21 (if that's when you file) regardless of whether your paperwork is complete or whether the trustee already knows what's in the estate. in fact, if you fail to include something in your paperwork, it's still automatically a property of the estate, and when the time comes and the trustee finds out that it was omitted, the trustee can come get it.

Thank you Music. That is all true. Our host I believe is attempting to make the best of a bad situation that as with all of us became a bk.

I believe though, he is assuming too many liberties that are really not available to him in a legal sense. You just cannot bk and profit within it and/or because of it. Just like paying preferential payment to debt, he cannot use proceeds from a forfeited mortgaged house to pay for another house. It does not compute in a legal fashion. 'Hub

[frogger]

a "suggestion of bankruptcy" in the sense the OP is thinking does not exist. either you file for bk or not.

I did a little googling on suggestion of bankruptcy / florida and here is what I found:

http://definitions.uslegal.com/s/suggestion-of-bankruptcy/

Suggestion of bankruptcy is a document filed with a court to put it on notice that the defendant in a pending lawsuit has filed a bankruptcy case. A party can file a suggestion of bankruptcy whenever a party believes that the bankruptcy or automatic stay provision of bankruptcy code has an effect on a state court case. The suggestion of bankruptcy will include the name of court in which the bankruptcy was filed and the bankruptcy case number. The party must identify the bankruptcy trustee and give instructions on the disposition of any monies of the debtor held by the court. A copy of the suggestion of bankruptcy is served on each party to the law suit.

Upon the filing of a notice or suggestion of bankruptcy, all action against the debtor is stayed for a specified period unless otherwise ordered by the court. The plaintiff must prove that the lawsuit in question is not subject to bankruptcy or that the plaintiff has sought relief from the automatic stay. Failure to such proof within a time set by the court will typically result in a dismissal without prejudice of the claim against the defendant who filed bankruptcy. Suggestion of bankruptcy rules vary by local area.

Therefore, it appears that you can only file a suggestion of bankruptcy notice AFTER you have filed for bankruptcy

[justbroke]

I just received summary judgments of foreclosure on six houses. The sale date is January 22nd.

I want to file bankruptcy in February after collecting February rents, getting caught up on certain mortgages, taxes, and bills.

I don't know why anyone hasn't caught this, but those dates just will NOT work. The foreclosure sale date is 1/22/2010, so filing after that date, would not prevent the foreclosure.

You cannot file a "suggestion of bankruptcy" unless you have actually filed a petition with the Bankruptcy Court. Although it would appears, at first glance, that a suggestion of bankruptcy is not actually a bankruptcy, you do actually have to file and have a pending bankruptcy!

So, you'd have to actually file the Bankruptcy Petition (not a "suggestion", but an actual petition with the U.S. Bankruptcy Court) before 1/22/2010... and immediately contact the lender's foreclosure attorney and the Circuit Court with the "suggestion" of bankruptcy... including the case number.

[JRScott]

Yes JustBroke I pointed that out earlier he just doesn't want to accept what I said .

[JRScott]

Mortgages, taxes, insurance, utilities, repairs, rents - the things it takes to run a business. The bills have not stopped. If the money coming in equaled the bills, I wouldn't be here, would I?

JRScott, I think it's hilarious that you see fit to judge. Perhaps you missed your calling and you should have been a bankruptcy judge. Obviously you've never been a landlord.

Clearly you are unwilling to let any of my points permeate. How are my rental agreements in bad faith if I disclose to the tenants the situation? I am still giving them the premises in exchange for the rent, same as ever, and they are protected from eviction by the Act.

Moreover, what exactly is it you propose I do?
A) Let all the properties go vacant because I can't afford to pay the mortgages? Contribute to crime, delinquency of neighborhoods, declining property values and bank losses?
B) Send all the rent money from each respective house to each respective lender, rather than preserving some houses and letting others go?
C) Use a formula that will satisfy JRScott's ethics while causing me to starve? Sorry, I went down that road last year before submitting to bk prep, and I'm glad our country has this alternative.

Your turn, since you weren't paying your bills, what did you do with your money before you declared bankruptcy?

If you've disclosed to the tenants the nature of the problem and that the properties are in foreclosure and did so at the earliest convenience of when you discovered yourself in this situation then it is not in bad faith. However if after you stopped paying any mortgages you signed any rental agreement that did not disclose the properties were in foreclosure then you acted in bad faith.

I had a back injury and was out of work for 3 months and then only could find part time work for about a year. Fell behind, pay was lousy but at least it was something. Ultimately that led to my bankruptcy....my back is still very bad these days.