surrendering house but stay and pay?

[nichole04]

My attorney said we could check surrender house for our ch. 7 but do a stay and pay. Can this be possible? We want to keep the house but are over the median by about $20,000. We wanted to state that we are reaffirming the
1st mortgage but not the 2nd, 3rd, and 4th. The lawyer said we would catch heck from the UST if we check reaffirm b/c we owe so much on the house.

1st mort-$320,000
2nd HELOC-$30,000
3rd mort-$47,000
4th mort-82,000

house appraised for $325,000

we want to settle the 2nd mortgages after our discharge and keep the house but want to make sure this advice is correct. We don't want to check surrender then have the UST or judge take the house even though we are current on our payments. I just got served from the cops today b/c we are being sued by our leasing company who we rented our business space from. The cop said we have 7 days to file an answer or we have to vacate the property. How does this play into all of this? We are filing ch 7 in 2 days. If we check surrender can they take our house in the bk? We are in Georgia and need help asap! Thanks.

[justbroke]

The "retain and pay" (a/k/a stay and pay) may work for you, but Georgia is in the 11th Circuit and their is precedence from the 11th Circuit Court indicating that you can't do that. However, it's up to the lender/creditor to complain to the court. Usually, the big lenders don't care... it's the little ankle biters (like credit unions) that throw a fit that you don't reaffirm, redeem or surrender.

we want to settle the 2nd mortgages after our discharge and keep the house but want to make sure this advice is correct. We don't want to check surrender then have the UST or judge take the house even though we are current on our payments.

That's not going to happen because the home is encumbered. However, you seem to have "some" equity when it comes to the 2nd mortgage. Your attorney can work out the best strategy, but you need to get the TRUE value of your home because you do have multiple junior liens.

I just got served from the cops today b/c we are being sued by our leasing company who we rented our business space from. The cop said we have 7 days to file an answer or we have to vacate the property. How does this play into all of this? We are filing ch 7 in 2 days. If we check surrender can they take our house in the bk? We are in Georgia and need help asap! Thanks.

If you are filing in 2 days, then that will stay the eviction. However, if that's an actual Writ of Possession in Unlawful Detainer order... the stay will only protect you for so many days.

[nichole04]

We just had the appraisal done in January. And the eviction notice was actually for my business which I closed in December. The cop did not know I had a business in another location. I am in arrears on my rent so I should be o.k. with this right? Should we still check reaffirm or can you just not check anything? We were told that you have to reaffirm, retain, or surrender. We want to stay and pay so what is the best option for this? We just don't want to check surrender and then end up losing the house because we are current on all mortgages. Thanks.

[justbroke]

I'm am in Florida and I too am covered by the Taylor case in the 11th Circuit which does say that you must redeem, reaffirm, or surrender. I put reaffirm on mine but I am probably not going to sign it. I did put retain and pay on some other things, and no one has complained. It really is up to the creditor to complain. I haven't heard of a Trustee forcing someone to redeem, reaffirm, or surrender.

Be careful when renting under the terms of a lease and filing bankruptcy. You have to disclose it on the petition. You also have to notify the landlord and you have to cure the arrears rather quickly, unless you and the landlord come to some agreement. I don't know if you're trying to keep your lease or not, but Bankruptcy is not a good way to cure arrears on a lease.

[nichole04]

I am not keeping the leased retail space for my closed business. I cleaned it out in December so there is nothing there for them to take. As long as they can't touch my home that is all I am concerned with. Justbroke do you think if I check reaffirm the ust will try to force us into a ch 13 since we are so underwater? or could the ust force us into a ch 13 if we check surrender since we would no longer technically be liable for the mortgages? I just haven't ever heard of checking surrender and then doing a ride through on a mortgage.

[iv65536]

Leased retail space vacated in December: Assuming you are personally responsible for this lease, rejecting the lease will be the end of that, and the landlord would simply be another unsecured creditor.

[justbroke]

Justbroke do you think if I check reaffirm the ust will try to force us into a ch 13 since we are so underwater? or could the ust force us into a ch 13 if we check surrender since we would no longer technically be liable for the mortgages?

The UST isn't going to force you into a Chapter 13 just because you're keeping property. However, in a Chapter 7, you don't get the presumption that your home is "necessary for an effective reorganization' of the debtor. In other words, a Chapter 13 automatically presumes your house is necessary, so Trustees can't attack that. In a Chapter 7, they can. The problem with them attacking a home your keeping, is that you'll still get to keep it in a Chapter 7, and will be right back to the fact that your expenses exceed your income.

As to the second part of your questions, that's the real issue. If your'e over-the-median, then the UST may look for ways to reduce your expenses to push you into a Chapter 13 (or deny a Chapter 7). If you are surrendering property, that's a perfect place for the UST to claim that you don't actually have the expense going forward. Of course, this varies by District, so how your District behaves is important. I will say that the overwhelming majority say that you cannot schedule payment on Schedule J for surrendered property.

I just haven't ever heard of checking surrender and then doing a ride through on a mortgage.

That's because you don't check surrender and "ride through". By putting surrender, that indicates that you will abandon the place. If you go outside the 3 statutory reasons and put the commonly used "other: retain and pay"... this indicates to the bank, your willingness to stay and continue paying on time! Big difference.

[nichole04]

Thanks justbroke. That makes sense. I will try my best to get her to allow me to check other. I am just to nervous to check surrender b/c I don't want to actually surrender but stay and pay.

[justbroke]

I don't want to actually surrender but stay and pay.

We all want to just stay and pay!

[paystayFla]

I payed and stayed

I discharged a Chpt 7 in Nov 2006, 1st and 2nd mortgage went. I checked reaffirm but the lenders didn't send me agreements or even show up at the meeting. Ive been staying and paying since. I stopped paying this summer as my attorney advised me that enough time had passed that I may just walk, as no reaffirmation ever took place, and go buy another house.

My credit reports shows both mortgages as discharged w balance of $0. Of course they still have the lien.