Keep or Surrender Townhouse

[misty95]

Hello,

I will be filing Chapter 7 soon. On the BK lawyer's questionnaire it asks if I want to "keep" or "surrender" my townhouse.

I need clarification as to what happens if I say I want to "keep" it. I'm not sure if all debts get discharged in BK automatically even if one wants to keep the property and keep paying on it.

I am under water on the home loan, but would like to stay living in the townhouse as I like it, and rent elsewhere would be about the same cost or more as my monthly loan payment (plus the cost of moving etc.).

Will my home loan still be discharged in BK if I say that I want to "keep" the townhouse? Or will I still be liable for and owe the total loan amount? Do I have to "surrender" the townhouse in order for the loan to be discharged?

I'm not sure if I understand correctly, but from reading on this forum, I believe that the loan will be discharged whether I keep it or surrender it. The loan will be discharged in BK no matter what I decide. The only way that I would be liable for the loan would be if I signed a reaffirmation agreement (which I will not do). Can someone please clarify if my understanding is correct?

I understand that I must be current on the loan payments prior to filing BK in order to keep the townhouse or I will not be able to keep it. Then keep making the monthly payments. The bank is Wells Fargo. Does anyone know if they normally do this for someone who files BK? Do I need to contact them before filing? Or just continue making payments normally?

Also, later on if I decide that I want to move, I understand that I can do so, and the bank cannot come after me for any money, as the loan will have been discharged in BK, and I will have no obligation to pay any more. Is this correct?

What I am concerned about if I say that I want to "keep" the townhouse is: 1) that the loan won't get discharged and I will still be obligated for the whole loan amount; or 2) if the loan is automatically discharged in BK, and I keep making the monthly payments, the bank can just arbitrarily decide to foreclose whenever they want. Is either one of these cause for concern?

Thank you very much for your help in clearing up this confusion for me.

[scorpion35]

Hello,

I will be filing Chapter 7 soon. On the BK lawyer's questionnaire it asks if I want to "keep" or "surrender" my townhouse.

I need clarification as to what happens if I say I want to "keep" it. I'm not sure if all debts get discharged in BK automatically even if one wants to keep the property and keep paying on it.

I am under water on the home loan, but would like to stay living in the townhouse as I like it, and rent elsewhere would be about the same cost or more as my monthly loan payment (plus the cost of moving etc.).

Will my home loan still be discharged in BK if I say that I want to "keep" the townhouse? Or will I still be liable for and owe the total loan amount? Do I have to "surrender" the townhouse in order for the loan to be discharged?

I'm not sure if I understand correctly, but from reading on this forum, I believe that the loan will be discharged whether I keep it or surrender it. The loan will be discharged in BK no matter what I decide. The only way that I would be liable for the loan would be if I signed a reaffirmation agreement (which I will not do). Can someone please clarify if my understanding is correct?

I understand that I must be current on the loan payments prior to filing BK in order to keep the townhouse or I will not be able to keep it. Then keep making the monthly payments. The bank is Wells Fargo. Does anyone know if they normally do this for someone who files BK? Do I need to contact them before filing? Or just continue making payments normally?

Also, later on if I decide that I want to move, I understand that I can do so, and the bank cannot come after me for any money, as the loan will have been discharged in BK, and I will have no obligation to pay any more. Is this correct?

What I am concerned about if I say that I want to "keep" the townhouse is: 1) that the loan won't get discharged and I will still be obligated for the whole loan amount; or 2) if the loan is automatically discharged in BK, and I keep making the monthly payments, the bank can just arbitrarily decide to foreclose whenever they want. Is either one of these cause for concern?

Thank you very much for your help in clearing up this confusion for me.

the loan will not be discharged if u reaffirm it
real estate loans are secured priority debt

u can reaffirm it keep paying and if u later default u will be risponsable for that debt

if u don't reaffirm u can still stay in your townhouse as long as u make your payments on time.if u later decide that u can no longer afford it or want to move u can walk away from it and owe nothing and be free and clear of that debt because in this case it was included in the BK filling

[SMinGA]

I don't see any error in your thought processes as to how reaffirmation works and such.

The only possible adjustments, and they are minor: after filing your loan may be handled by another department within WF so you may need to send payments to a different address. About 1-2 weeks after you have filed you can call and ask.

As long as you are current, the lender cannot foreclose. There are requirements (state specific) for foreclosure, and failure to reaffirm is not a reason to call the loan.

Worth noting: if there are HOA fees (not sure if there would be in a townhome) then only fees up until filing would be eligible for discharge. Fees after filing would not - so if you later walk away, you would owe HOA fees until you are no longer the owner of record.

[misty95]

the loan will not be discharged if u reaffirm it
real estate loans are secured priority debt

u can reaffirm it keep paying and if u later default u will be risponsable for that debt

if u don't reaffirm u can still stay in your townhouse as long as u make your payments on time.if u later decide that u can no longer afford it or want to move u can walk away from it and owe nothing and be free and clear of that debt because in this case it was included in the BK filling

Thanks. If the loan is discharged in BK, that is what I want. I do not want to reaffirm. I don't want the risk of being responsible for the loan if later on I run into trouble and can't pay it.

From what you said, I understand that I can say that I want to keep the townhouse. The loan will still be discharged in BK even though I stay there. I will have no obligation to pay the loan anymore. But, I must keep making the payments in order to stay. Later on if I want to leave, I will have no obligation to pay the loan anymore.

I just wanted to make sure that the loan will be discharged in BK even if I say I want to keep the townhouse. So, it looks like it will be discharged - as long as I do not reaffirm.

[iv65536]

Thanks. If the loan is discharged in BK, that is what I want. I do not want to reaffirm. I don't want the risk of being responsible for the loan if later on I run into trouble and can't pay it.

From what you said, I understand that I can say that I want to keep the townhouse. The loan will still be discharged in BK even though I stay there. I will have no obligation to pay the loan anymore. But, I must keep making the payments in order to stay. Later on if I want to leave, I will have no obligation to pay the loan anymore.

I just wanted to make sure that the loan will be discharged in BK even if I say I want to keep the townhouse. So, it looks like it will be discharged - as long as I do not reaffirm.

Assuming you don't reaffirm, your personal obligation for the loan would be discharged. However, the lien stays in place, and if you continue to pay, you will keep your home.

Down the line, if you decide to walk away, all they can do is foreclose; they will not be able to get a deficiency judgment against you.

[misty95]

I don't see any error in your thought processes as to how reaffirmation works and such.

The only possible adjustments, and they are minor: after filing your loan may be handled by another department within WF so you may need to send payments to a different address. About 1-2 weeks after you have filed you can call and ask.

As long as you are current, the lender cannot foreclose. There are requirements (state specific) for foreclosure, and failure to reaffirm is not a reason to call the loan.

Worth noting: if there are HOA fees (not sure if there would be in a townhome) then only fees up until filing would be eligible for discharge. Fees after filing would not - so if you later walk away, you would owe HOA fees until you are no longer the owner of record.

Thank you very much for your help and confirming my understanding that I can keep my townhouse, as long as I keep paying, that the loan will still be discharged in BK anyway, so I will not be liable for it, and that the lender cannot foreclose as long as I am current.

I did not know that there are laws that the lender cannot foreclose as long as I'm current (even if the loan is wiped out and discharged in BK and I am not legally responsible for it).

Thanks, too, for the info. regarding possible change in payment address, and also HOA fees. I do have an HOA and am current. So, in the future, if I do decide to leave, I would still be stuck with paying the HOA fees until they foreclose or sell, but not be obligated for the loan itself since that will have been discharged in BK.

[misty95]

Assuming you don't reaffirm, your personal obligation for the loan would be discharged. However, the lien stays in place, and if you continue to pay, you will keep your home.

Down the line, if you decide to walk away, all they can do is foreclose; they will not be able to get a deficiency judgment against you.

Yes, that is what I wanted to hear. As long as I don't reaffirm, I will not be responsible for the loan. I will not owe it. It will be discharged in BK. However, I can stay as long as I want as long as I make the monthly payments.

I was concerned about later on, that they could come after me for the money if I decided to leave. You confirmed, that they cannot, but they can foreclose and take the house (which is understandable).

Thank you very much for your help.

[tcreegan]

reaffirm intention

Hi Misty, check w/ your lawyer about this: Lawyer in S.Car. is having clients put reaffirm on their statement of intentions, but never sign a new contract. (never actually reaffirm) He said this is needed to give the legal protection of the bank not being able to foreclose if you are current. (not all state laws are the same on this) Something to ask the lawyer in your state.....

Tom in Colo

[misty95]

Hi Misty, check w/ your lawyer about this: Lawyer in S.Car. is having clients put reaffirm on their statement of intentions, but never sign a new contract. (never actually reaffirm) He said this is needed to give the legal protection of the bank not being able to foreclose if you are current. (not all state laws are the same on this) Something to ask the lawyer in your state.....

Tom in Colo

Thanks for the info., Tom. The lawyer's questionnaire only listed "keep" or "surrender". Nothing was noted about reaffirmation. I will make sure to check with him, tho, so he lists it in a way that will make sure I'm protected from foreclosure. I appreciate you telling me about this.