Anyone know what happens to a Reverse Mortgae in a BK?

[tiggor96]

I have a home which i was using as a rental property but I had to do a Deed in Lieu and they are coming after me for the money owed. I have a Reverse Mortgage on my current home and am wondering what will happen to it if I file Chapter 7. Will I lose my house? Does anyone know what actions i can take to keep it? I think I might have some equity left in it and i'm afraid they will take the house. I have cancer and am undergoing chemo and I can not afford an attorney and i can't lose my house. Please help.

[Pandora]

I'm so sorry you're having to endure all you are right now and having to face a bankruptcy on top of it. My prayers are with you during your journey as well as lots of well wishes and positive thoughts headed your way.

I've managed to find this:

REVERSE MORTGAGES & BANKRUPTCY

Real estate secured by a reverse mortgage is an asset. The equity in that real estate asset is determined the same way as any other asset. Determine what the fair market value of the property is through appraisals or market evaluations, deduct the amount of the secured loan and factor in the cost of sale. Whatever amount is remaining is the equity or ownership amount of the real estate.

A trustee in a Chapter 7 bankruptcy case can liquidate real estate secured by a reverse mortgage if there is available equity above and beyond what a debtor can protect as exempt.

The trustee may have to pay the holder of the reverse mortgage a pre-payment penalty if one is provided for in the mortgage documents. In the case of real estate with significant equity, the pre-payment penalty will not deter a trustee from liquidating the property.

In conclusion, consider real estate property secured by a reverse mortgage to be an asset, subject to liquidation in a Chapter 7 bankruptcy case, just like any other case involving real estate. "


Also:

"....when a homeowner files Chapter 7, some of that individual's assets might be sold by the bankruptcy trustee and the proceeds used to pay creditors. If the debtors' equity in the home doesn't exceed the exemptions our state allows, they can keep their home.

When a bankruptcy is filed, the situation becomes more complicated with a reverse mortgage, and it's crucial that debtors obtain experienced legal advice. Most important to remember, though is that the filing of a bankruptcy itself is NOT a default under the reverse mortgage agreement, and therefore the bankruptcy will not automatically lead to foreclosure on the mortgage. The remaining equity in the home that can be accessed through the reverse mortgage will be considered under the exemption rules (I was involved in drafting the exemptions portion of Indiana's bankruptcy law). In a Chapter 13 bankruptcy, where there is a three-to-five year debt repayment plan, the remaining payments to the homeowner will be taken into account for the plan."

[Pandora]

Hmmm........

Okay I'm really uncertain of something here OP - you say "If you file CH. 7" - however... in your other posts you stated you already filed Ch. 7 in Feb 2010 and were discharged May 2010. http://www.bkforum.com/showthread.ph...467#post453467

So which is it - you either filed and were discharged, or you didnt... ??

You know - I hate to even say this but I'm going to......why? Because here lately I believe more and more people are posting on here "just because" and coming up with "stories" and I honestly hope what you wrote above is true because if it isnt, then shame on you! I lost my father to cancer, held his hand as he took his last breath - and its something I wouldnt wish on anyone.