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Chapter 7 House might be an asset, PA

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    #1

    Chapter 7 House might be an asset, PA

    Hi,

    My mother in law will be filing Chapter 7 in PA soon. Her house is worth $130K (appraised), and she owes about $92K. She understands that the trustee may take the house. She would prefer to keep it. My question. Should she put "keep" on her petition, then if the trustee decides to take it, she quits paying the mortgage? The house needs MAJOR repairs so there is a chance that no one will buy it. Does anyone know the timeline in PA for foreclosure (if she quits paying and the trustee can't sell it)? She doesn't want to lose it to foreclosure, but doesn't want to keep paying if she's going to lose the house anyway. I thought she might bank the payment, then catch it up later if it doesn't sell? Any thought out there?

    Lori
    Tags: None
    #2
    What sort of apprasial are you talking about? One for property tax purposes or, something like a CMA?
    Does that apprasial take into account the major repairs needed?
    What does her lawyer say about the chnaces the trustee may see it as an asset case? How much equity is she allowed to exempt?
    Just need more facts before anyone can make any suggestions?

    Comment

      #3
      She paid someone for an official appraisal. Independent appraisal to see what the value of the house if sold "as is". He mentioned that if it was in good condition she could maybe get
      $160,000. Honestly, I don't believe it. I know what the house looks like. It looks like a 45 year old house that has NEVER had any work done. Everything is going on it including the roof.

      yes, Her lawyer is concerned about the value at $134K. She can use federal exemptions which are around $23K homestead. The lawyer wants her to get a contractor to give her a written estimate of what the costs are to do the repairs.

      The house is very small and similar houses in her neighborhood are selling for around $140K but they are rehabbed. I haven't seen a copy of the appraisal.

      Comment

        #4
        Well, if she wants to keep the house, she needs to take some steps to give her lawyer a reason to argue that the apprasial is inflated. Get some written estimates regarding repair work.
        If it's extensive enough, it's likely no lender would fund a mortgage on a house in such disrepair.

        Comment

          #5
          Does she have regular income? If so, has she considered filing a Chap 13 so that she can pay the non-exempt value of the home to the unsecured creditors over 5 years?
          LadyInTheRed is in the black!
          Filed Chap 13 April 2010. Discharged May 2015.
          $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

          Comment

            #6
            Roofs typically need X number of years of "roof life" left to qualify for most loans (FHA for sure and I am pretty sure about VA needing this, too).

            FHA Appraisals and Roof Requirements
            https://www.fha.com/fha_article?id=257
            One frequently asked question about the FHA loan process is related to FHA appraisals and the minimum requirements for the roof of the home. It's the appraiser's job to look over the home and make sure it meets FHA standards.


            Last roof I replaced (about 8 or 9 years ago on an 1600 SF 2-story house I was selling that didn't have enough roof life remaining) was over $10k for a tear-down with 30 year asphalt shingles.
            ~~ Filed Over Median Income Chapter 7: 12/17/2010 ~~ 341 Held: 1/12/2011 ~~ Discharged: 03/16/2011 ~~
            Not an attorney - just an opinionated woman.

            Comment

              #7
              She is 67 and only works part time at a grocery store. She can't afford to fund a 13. She's having a contractor come out and give estimates for the work that needs to be done. I'll mention what I read above to her. Thank you all for your input!

              Comment

                #8
                Our house was built in 1988, and our insurance company is going to drop us next February unless we can prove to them that we have had a new roof put on. So we are TRYING to get a roofing contractor to come out and give us an estimate....
                "To go bravely forward is to invite a miracle."

                "Worry is the darkroom where negatives are formed."

                Comment

                  #9
                  Originally posted by AngelinaCat View Post
                  Our house was built in 1988, and our insurance company is going to drop us next February unless we can prove to them that we have had a new roof put on. So we are TRYING to get a roofing contractor to come out and give us an estimate....
                  Bummer! Our house was built in 1923. It's very difficult to find any insurance company that will insure a house that hold, regardless of the condition. The insurance company sent somebody out a couple of months ago to do a periodic inspection of the exterior. I am crossing my fingers we don't get a letter telling us we have to fix something. The roof is about 10 years old, but I think it's in good shape. But we're on a hill and there is a retaining wall that leans and a long fence that is falling down. We have it propped up hoping to make it last until I'm done with my BK. There's also the loose railing on the front porch which they made us fix right after we bought the house. It just won't stay fixed!
                  LadyInTheRed is in the black!
                  Filed Chap 13 April 2010. Discharged May 2015.
                  $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

                  Comment

                    #10
                    Originally posted by LadyInTheRed View Post
                    Bummer!
                    That's for sure. It already is hard enough as it is to get anyone to insure us in Florida because of the insurance companies pulling out in the wake of the 2004-2005 hurricanes. And those that have stayed, have such ridiculous criteria for underwriting insurance policies.

                    Good luck with your insurance company....
                    "To go bravely forward is to invite a miracle."

                    "Worry is the darkroom where negatives are formed."

                    Comment

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