Filling out Ch 7 forms: Question about foreclosed home and 80/20 mortgage

[abrokebum]

Hello everyone,

I am filling out the paperwork in preparation for filing Chapter 7 in Oregon (moved back from Arizona in July 2009).

I have a couple of questions, but am breaking them down in different posts:

Question 1: How to account for foreclosed home in Ch. 7 paperwork?

Background: I abandoned my home in Arizona in July/Sept of 2009. I lived there for 2 years, and about 6 months.

I have received a 1099-A from the primary mortgage holder (10/2009) and box 5 "Was borrower personally liable for repayment of the debt?" is marked "Yes".

The secondary mortgage holder is still sending me bills (I have not paid them anything).

This question is about how these creditors should be entered on the chapter 7 paperwork. As far as I know, the secondary mortgage is non-recourse, but I don't know that for a fact.

What schedules do these debts go on? I'm not sure how to classify either mortgage holder.

(The property was sold, and there are new owners living in the home, as of last winter/spring.)

Thanks in advance to anyone who can tell me how these debts should be listed.

[justbroke]

Question 1: How to account for foreclosed home in Ch. 7 paperwork?

You list the difference between the market value and the balance as a general unsecured debt on Schedule F.

If you're pro se then try our Pro Se Forum area. Lots of activity there and a good collection of pro se filers! Also, do you have a guidebook such as NoLo's Chapter 7 Bankruptcy Guide?

[tcreegan]

Hello and welcome abrokebum,

If the home has been sold, then your name is off the title/deed (be sure to verify this) and the home is no longer collateral for your debts. The mortgage lenders now are unsecured creditors.

What the 1st probably has is a deficieny; the difference between what you owed and what the property sold for.
The 2nd probably got diddley-squat from the sale, so they want the full amount.

Be sure to verify that your name is off the title/deed; maybe the new occupants are just leasing from the lender....

Remember to use AZ exemptions in your BK since you haven't lived 2 years in Oregon.

Hope this helps some,

Tom in Colo

[abrokebum]

You list the difference between the market value and the balance as a general unsecured debt on Schedule F.

If you're pro se then try our Pro Se Forum area. Lots of activity there and a good collection of pro se filers! Also, do you have a guidebook such as NoLo's Chapter 7 Bankruptcy Guide?

Thank you for the quick reply. I'm feeling a bit dense today, so would you please expand on this for me?

The 1099-A lists the Fair Market Value as approximately $160,000. It shows the balance of principal outstanding as $150,000. (This does not account for the $40,000 secondary mortgage holder at all.)

I know that the home actually sold at auction for somewhere in the neighborhood of $100,000. (I have no idea whether this is pertinent, or not, but it seems like it might be, considering that the box 5 of the 1099-A is marked "Yes".)

If I understand your post correctly, because the principal outstanding is less than the fair market value, then I do not need to enter anything for the primary mortgage holder?

Then I would only list the secondary mortgage holder on schedule F?

I will be filing pro se so I'll definitely check out that part of the forum, and I am using the Nolo book How to file for Chapter 7 Bankruptcy (courtesy of the local library).

[abrokebum]

Hello and welcome abrokebum,

If the home has been sold, then your name is off the title/deed (be sure to verify this) and the home is no longer collateral for your debts. The mortgage lenders now are unsecured creditors.

I searched the Pinal County website, and found my old home listed under a different person's name in the tax records. Is that proper evidence that my name is not on the deed?

What the 1st probably has is a deficieny; the difference between what you owed and what the property sold for.

So this means that I need to list the primary mortgage holder in Schedule F for the difference of the balance of what I owed, and the actual sale price?

The 2nd probably got diddley-squat from the sale, so they want the full amount.

This debt definitely gets listed on schedule F, right?

Be sure to verify that your name is off the title/deed; maybe the new occupants are just leasing from the lender....

Remember to use AZ exemptions in your BK since you haven't lived 2 years in Oregon.

Hope this helps some,

Tom in Colo

It helps a lot, and I appreciate it.

[justbroke]

The 1099-A lists the Fair Market Value as approximately $160,000. It shows the balance of principal outstanding as $150,000. (This does not account for the $40,000 secondary mortgage holder at all.)

The 1099-A is apparently for the FIRST only. You may be in a non-recourse State but what you write shows $10K in equity. (I believe Oregon is non-recourse.)

If I understand your post correctly, because the principal outstanding is less than the fair market value, then I do not need to enter anything for the primary mortgage holder?

Yes.

Then I would only list the secondary mortgage holder on schedule F?

Yes, but I would list the first mortgage as well with a value of "unknown" or $1. There's something wrong with the 1099-A with $10K in "extra" money there.

I will be filing pro se so I'll definitely check out that part of the forum, and I am using the Nolo book How to file for Chapter 7 Bankruptcy (courtesy of the local library).

Very good. Just make sure you get your FORMS from on-line at the U.S. Courts website! Don't use any of the forms in the NoLo book, since your book may be dated.

[abrokebum]

Great, so far, so good...

Am I correct that this home needs to be listed in section 5 of the statement of financial affairs? (Form B7 - I would think it would.)

I did download all of the forms from the courts website, including the local District of Oregon forms. (Somehow, I don't think the library would appreciate getting their book back with pages ripped out.) I also noticed that several of the forms have changed from the ones in the book, too.

Specifically, I notice that you cannot put ditto marks in columns that are expecting a dollar value, and that there is nowhere near enough characters available to enter the data in the fill-in pdfs as the Nolo book prescribes.

Thank you!

[justbroke]

It may be worth either getting a temporary copy of Adobe Acrobat or purchasing NitroPDF Professional. I did the latter and it was very helpful in completing forms.

As for the Statement of Intentions and foreclosures, you would need to list the foreclosure under Section 5 if it occurred within one (1) year of filing the bankruptcy petition.

[abrokebum]

Thank you very much for your advice. Much appreciated.