BK and Foreclosure of Investment Property

[jonance]

Hi,

I am filing in a few weeks to rid myself of investment property and a business line of credit (filing non-consumer). My question is, i haven't had anything but phone calls from the bank (no foreclosure yet) on them. After I file, what will happen? I know there is an automatic stay, but i am surrendering all the investment property. I only want to keep my primary residence. Will i still need to be served with foreclosure after the fact, or will BK automatically allow them to take the property back since i am surrendering them?

Also, on my primary, should i call my mortgage company to inform them i'm filing and want to reaffirm? Just to give them a heads up?

Thanks
John

[frogger]

Will i still need to be served with foreclosure after the fact, or will BK automatically allow them to take the property back since i am surrendering them?

Thanks
John

They will not automatically be allowed to take them when you file. When you file, the automatic stay will be in effect. You may look for the lender to be at your 341 to ask for a relief of this stay.

All of my lenders showed up. One of them asked for relief in order to start foreclosures, and it was granted the same day. The others haven't asked, and haven't started foreclosure.

With that being said, don't stress. It was the lenders attorneys that showed up. It was no big deal to them, no bad attitudes, just a relaxed atmosphere. They had did this before and it was nothing special. They were all very nice.

[jonance]

Thanks for the info! Did their attorneys ask you anything?

[frogger]

Thanks for the info! Did their attorneys ask you anything?

Not a thing. The only thing I had to do was give up the rental money that I had collected after I filed.

This was not unexpected, and I had it set aside in order to do that. Collecting the money was just part of trying to make a smooth transfer to the tenants.

The only things I had to take to the 341 was what my attorney stated was mandatory:

1. Proof of insurance on any vehicle in the case.
2. Drivers License
3. Social Security Card
4. Most recent pay stub
5. Copies of any tax cards of any real estate in which I have legal interest.
6. Copies of last tax returned filed if not already supplied to the attorney.

Smooth sailing so far..............

Our second (and should be final) 341 meeting will be the first part of February. I look for all to be well.

[jonance]

Why do you have another 341? What do you mean by "tax cards"..never heard of that?

[frogger]

Another thing for you to consider.......

You most likely have an assignment of rents clause that was in your loan paperwork. With that, any rent collected after you file will be the property of the lender.

It would be most advantageous for you to give the properties back to the lender on the day you file. You're not going to get to keep the rent money, so you should not subject yourself to the maintenance or expense issues. If you don't go ahead and surrender the property, you could possibly be responsible for some big $$$ if there are problems.

Gather up leases, most recent statements for the tenants, keys, and all that you have that would be helpful to the lender and give them a care package with everything.

Make it as smooth as possible for the tenant, and you will be doing yourself and the lender a big favor.

While they lender is still going to probably foreclose on you, keys = possession. Give them possession and give them the problems associated with it.

[frogger]

Why do you have another 341? What do you mean by "tax cards"..never heard of that?

I have another 341 because the trustee received my documentation at the first 341 meeting. There are 3000+ pages of documentation, so after going over half of the check-list, the trustee extended the meeting into February in order to have time to review the documentation.

Tax cards - property information available from the county tax office that shows property location, pictures, values.

[jonance]

Oh OK...I really only have 5 properties so it probably won't need an extended extra meeting. Did the trustee ask for those things before your first 341?

It's interesting in my case, b/c i haven't collected ANY rent for some time. The properties are managed by an LLC that i am no longer a part of that has gone bad. My name is still on the guarantees, and in some cases on loans. So any rent that is being sent in is managed by an LLC that i don't have anything to do with. Not sure what i can tell them there, but that is the case.

[frogger]

Oh OK...I really only have 5 properties so it probably won't need an extended extra meeting.

Probably not. My case is a little unusual.

Did the trustee ask for those things before your first 341?

No. The trustee did not ask me for anything. Everything had been supplied to my attorney, who took it to the 341 and gave it to the trustee. I don't know if the trustee had asked the attorney in advance or not.

Not sure what i can tell them there, but that is the case.

The truth. That's all that matters and is all that will be expected from you. You won't have any problems.

[jonance]

Thanks for the help...and i fully plan on sticking around the forums here to help others, especially non-consumer filers as we seem to have the toughest time getting good help online and even from lawyers. I feel i know the entire process now.

BTW, i doubt my banks will show up. National City and Bank of America...the only one that might is a local bank but i'm not worried about them. Just wondering how is yours unusual? Just due to the amount of props?

[frogger]

Just wondering how is yours unusual? Just due to the amount of props?

Yes. The amount of property and the level of supporting documentation.

[DecentHuman]

You had to give up the rent money even though the lenders still had to foreclose? Who made you give it up? The trustee? And she forwarded it directly to the lenders? So that's why you gave up the keys? Because if you didn't, you'd be expected to perform the maintenance without the benefit of the rent money to do it with?

[jonance]

For the record i am doint NOTHING! Have walked away....letting it all go to sh*t if you will. Don't care and am done. I don't see how this will affect me negatively. I don't thin yo uo have to maintain the properites...jst be sure there is insurance until they are the property of the bank

[DecentHuman]

Another thing for you to consider.......

You most likely have an assignment of rents clause that was in your loan paperwork. With that, any rent collected after you file will be the property of the lender.

I had an assignment of rents clause invoked on me once, but it had to be done by judge's order through the court as part of a foreclosure, and it wasn't retroactive.

I haven't read one of my assignment of rents clauses lately, but does bankruptcy trigger an automatic assignment of rents without a court order?

[DecentHuman]

I don't worry about insurance; the bank knows when they're not insured and will insure them. My bk attorney told me not to spend any money on any properties I'm not keeping, so I'm following her advice.