Trustee wants to sell our house

[kmbk2b]

The BA/Trustee has decided to sell our (underwater) home to try and make our case an asset case. He thinks that he can wipe out our HELOC and then sell the home for a profit to distribute to our creditors.

It's my understanding that our case might not close for up to a *year* while he attempts to sell the home and distribute any proceeds. We won't even know if our case is asset or no-asset until this time. If it becomes asset, we might lose our car and a few other items (or have the option to buy back a few thousand dollars in equity, which apparently isn't enough on its own to merit opening an asset case?).

Has anyone else had the Trustee sell their house? We wanted to surrender it (since it's so far underwater and we tried to short-sell it for over a year), but we didn't want our case to drag on and on.....

Thoughts?

Thanks

[StartingOver08]

Did your Trustee indicate why he thinks he can avoid the HELOC on your underwater house? I am trying to understand if this is an 'exception' based on some defect in the filing of your HELOC lien or if it is a trend that the Trustee's are now trying on the properties rather than accepting a surrender.

[kmbk2b]

Hmmm, I'm not totally sure. It is interesting, isn't it? I mean, even if the debt is wiped, doesn't the HELOC techinically still have a lien on the property? Or, since our HELOC/2nd mortgage was charged off at 180 days, it might become an unsecured debt? The Trustee quoted that he could potentially "wipe out" the HELOC, which would open the door to some equity in a sale (which would allow him to make our case an asset case). I don't know what "wipe out" means -- if it means literally cutting them off, or if the Trustee will try to negotiate with the 2nd to get them to cooperate.

Personally, I doubt he can sell the home for enough $$ to cover the 1st mortgage and the cost of sale, so perhaps he is working out a deal with our 1st as well? The 1st lender agreed to the short sale we had on the table, so I know they will take less than what they are owed (it was the HELOC that rejected the short sale offer -- they wanted a laughable 80% of the balance due!!!).

[StartingOver08]

Yes, this is very interesting. Oh...the mud becomes a little more clear now
You had a contract on the house already with a short sale that the first approved and the HELOC lender did not approve. The HELOC is now charged off so it is 'unsecured' although the lien remains on the property.
The Trustee does have powers to avoid liens. I don't know how he could wipe out the HELOC lien and pay other unsecured creditors. It would be interesting to see if it has been done in your district or other places.

Maybe HHM or one of the others have seen it and will post.

[kmbk2b]

Yes, and to make things a bit crazier, the original buyers no longer want to buy the house, so it's just sitting "on the market" again (listed on behalf of the Trustee this time...). For -- get this -- $100,000 more than the sales contract was for with the buyers who split after our 2nd turned us down on the short sale! And, it took 8 months to find buyers willing to pay $100,000 less than it's listed for now. I don't whether to laugh or cry... it's all so ludicrous.

[keepinitreal]

We wanted to surrender it (since it's so far underwater and we tried to short-sell it for over a year), but we didn't want our case to drag on and on.....

Not much you can do now, since the trustee is in control of your estate. Since you wanted to surrender your house anyway, hopefully you can put into savings what you were spending on the mortgage/property taxes and have a nice amount of money to relocate once the title is out of your name.

Enjoy the fact that creditors can't contact you, and try to build up a nice savings!

Good luck!