Not being asked the "right" Qs during 341

[lvasilieva]

Went to the 341 meeting today (filing ch 7 pro se).

The trustee was asking the same Qs from everyone. Like - did you sell any real estate within a year. Everyone in front of me was saying - No; I said - Yes, and he looked at me like he did not read my file at all. Finally found the disclosure on one of the schedules.

Then he keeps asking me about my current house, which is clearly marked as being SURRENDERED. Should I've corrected him? I was hesitant to embarass him though. So I did not. This surrended property is a duplex - I live in one part and renters live in another. My salary + rental is much more then state allowance (salary alone is below), however - since I was surrendering it, I noted on the bottom of Sch (where they ask if I know of any changes) - I am losing the rental income because of the surrender. Btw - I am still current on the mortgage because I do not have any other place to live. Hoping to get another place after the discharge.

Also - on the Sch J - I make a note for the future changes, that I will not be paying house maintenance. However - I did not remove the mortgage payment (because it approx the same as rent for an apartment in the area). Should I file amendment for Sch J, making a note that the mortgage will not be there, but some sort of rent will be? I have no relatives in the area, so I will have to rent.

If my case is dismissed because of income higher then median (with rent collected), do I have any right to appeal?

What if I stop paying for the duplex this month? According to the mortgage agreement - the rent on the rental part of the duplex belongs to the lender if I default on the mortgage, so - technically - I will not have this income anymore... and no mortgage. Should I quickly find some rental place to live instead and put the number on the amended expense schedule?

Looks like I should have hired a lawyer, but I thought - if I have to surrender every asset I have - why bother?

[october99]

I believe I have read that if you surrender your property then you can use the local standard for housing. This interested me because using the standard would push my expenses much higher compared to my mortgage.

You have to live somewhere right? And it's going to cost you. I hope it's not an issue for you. Hopefully someone with more insight will have a more specific answer for you.

[despritfreya]

In response to:

"he keeps asking me about my current house, which is clearly marked as being SURRENDERED. Should I've corrected him? I was hesitant to embarass him though. So I did not. This surrended property is a duplex - I live in one part and renters live in another. My salary + rental is much more. . ."

What exactly was he asking? Was he inquiring about the rental income? I trust you have not collected any rents since you filed the case. Please elaborate on what the issues were.

[lvasilieva]

He was asking - how I came up with the value of the property, what I purchased it for, as if he was assuming that I'm keeping it. Same Qs as from everybody else.

Why couldn't I collect any rents? They go straingt into mortgage payment that I'm still making. The last I paid and collected was before filing date. Should I stop paying and collecting this month? I did not secure any other place yet. What if the debts are not discharged? I will be left with the debts and without the house?

Please - explain.

[despritfreya]

In response to:

"Why couldn't I collect any rents? They go straingt into mortgage payment that I'm still making."

Technically, if the funds pass through your hands they must be turned over to the Trustee as you have no right to collect rents once the case is filed as those rents are property of the Estate.

In practical terms, if the lender has an assignment of rents and you can trace the funds from the renters, to your account and then directly to the mortgage company, the Trustee may not pick up on the issue:

You have indicated that you are not in default. An assignment of rent provision usually does not take effect until there is a default under the terms of the note and security agreement. As a result, the rents you have collected post petition, while used to service the mortgage, were not "cash collateral" and really belonged to the Estate.

You should have your renters pay directly to the lender.

[lvasilieva]

Thank you for clarification. I guess I will just tell the renters to keep $$ and start planning for moving out using the funds. But - if I plan to keep mortgage current until discharge and actual surrender - am I allowed to send any payments to the lender, or it is prohibited?

Would you recommend filing an amendment to income/expense in my case?

[despritfreya]

If you want to keep the property then you must pay the lender. All I am saying is that you should not be directly collecting rents.

As to Schedule "I", since I tell my clients they cannot collect rents I do not reflect the rental income on Schedule "I". Typically my clients surrender rental property (rarely is it a duplex where they actually live) therefore I do not reflect the mortgage on Schedule J. HOWEVER, since this property is also your residence, if you are trying to keep it then the payment should be listed.

If you are surrendering, why keep the mortgage current? Makes no sense. Are you not throwing away good $$? Just a thought.

[lvasilieva]

Hi. Thank you for explanation. I'm keeping it current because I don't know when and how the bacruptcy will go thru, and I do need a place to live. I also don't want the bank kick out my renters (who are good friends). If they are paying on time their rental agreement should be honored by the bank and any future owner. I've just signed an annual lease with them.

[SMinGA]

If the trustee is asking about the value of the duplex - sounds more like he is sniffing for asset $ than because he wants to know about your expenses.

[lvasilieva]

Well - I do plan to surrender, except that I do not want to do it until I actually have to move out. Another problem is utilities. They are not shared. So - they have to be switched into my tenants name eventually. They just like the house and want to stay there. It's their decision if they want to deal with the foreclusure around the property. They can keep it in a good order if needed. And since they are not starngers I am kind of going along with it. Would it look to UST that I'm effectively NOT SURRENDING?

[lvasilieva]

Why would it matter? I'm surrending it anyway. Are you thinking he wants to sell it to pay other creditors? Good luck with that! Have tried for 2 years myself...

[SMinGA]

If he can sell it for more than you owe - and you're not claiming a homestead exemption because you're surrendering it - then yes, he is trying to see if there is $ in it. He might see potential as a 2 unit investment property, with 1 unit already rented.

Why would it matter? I'm surrending it anyway. Are you thinking he wants to sell it to pay other creditors? Good luck with that! Have tried for 2 years myself...