When should we cancel house insurance and turn off utilities?

[ccaplinger]

We are giving up our house in our bankruptcy. We haven't actually filed yet though. We were waiting to find a rental house because we have some money saved for the deposit and first months rent and didn't want to lose it. We have hopefully found a rental house. We paid the deposit and filled out the application last night. They are aware of the impending bankrutpcy. The house is not completely ready. It needs cleaned and a small amount of work. We told the manager that we would like to be in by Sept 15.

My questions are these:

What should we do once we move out? Would it be better to just call the mortgage company and advise them they can go ahead and take possession anytime?
We will be converting our house insurance into a rental policy. When should we cancel our house insurance?
Also, when should we turn off our utilities?

[jamist649]

I would let your BK attorney handle the dealings with the mortage companyI wouldn't call them direct. As far as insurance you can probably discontinue soon after filing. The mortgage company will "force place" a policy as soon as they get word from your attorney that you have moved out and cancelled the policy. Of course ask your attorney first. Utilities can probably be disconnected right away, since there is very little change of freezing pipes, etc before title is transferred back to the bank. Best of luck to you!

[BassBoy]

Your attorney may not contact the lender for you or the bank/lender may not be willing to deal with your attorney with regards to you surrendering the home. Your attorney specializes in BK, and not in property title transfers. In any case, you should contact the lender and inform them that you have vacated the property and on what day you did so...........preferrably, contact them within a day or two after you've moved everything out and you're in your new place. The bank may send out the Sheriff and have the property secured so no one is to break in and/or vandalize the property.

As for insurance: Inform your insurance company that you've moved out and they will protect the house from fire and vandalism. Don't worry about whether or not the lender will place insurance on the property at this time because if your escrow account is not depleted, this will continue to cover the cost for now. Even if the lender does place insurance on the property, this is of no concern to you.

Definitely shut off all of the utlities in the house (i.e. water main and circuit breaker) and contact the utility companies to have them disconnect at the street and the meters. The gas company should lock your gas meter, the electric company should remove/lock-out the electric meter and the water company should shut-off at the curb. That way, no one will be able to use any utilities unless they call and activate new service. If you're not moving too far from where you live, you can check-up on these to see if the utility companies physically came out and did what you requested. If not, then keep on them.

[Minnymouth]

PLEASE NOTE: As long as your name is on the deed/title to that property and home you are responsible for the insurance on the property/home. Until the lender takes back the property (either thru foreclosure, lifting of the stay, etc) you are responsible for all insurance on the property. DO NOT CANCEL YOUR INSURANCE because if something happens before the property is out of your name, you will be held responsible for damages.....

Talk to your attorney..........

[jamist649]

Exactly Bigboy2u. Also, your BK attorney may not deal with the finance company for you?! What the heck are you paying them for if they're not going to handle the creditors? I surrendered a rental house in my BK13 and we were told by our attorney that we could cancel the insurance as soon as she notified the mortgage holder that we had vacated. I sure would hate to think that I had to go baby-sit a house that I no longer lived in until the bank got off it's rear-end to come secure it, which could take months!

[erinb1975]

Also you may run into what we did. Our insurance company will NOT continue insuring a vacant house. Once they find out we moved out, they will drop our homeowner's policy. I am waiting until we get the last of our stuff out this weekend and then I will call Countrywide as well as our insurance company (Erie) and let them know to drop the homeowners'. This was on the advice of my lawyer.

[cool33097]

As the previous poster stated, you are responsible for the house until the bank takes it back. Because you are surrending in you bk doesn't mean you can just let it go. Still in your name.

[BKParalegal]

Wow, what a melange of mis-information. As a current paralegal and a former executive in the default department of two of the largest banks in the country, I can unequivocally tell you that all you have to do is call the mortgage company(you can send a letter as well,certified is best) and let them know that you are no longer in the home(make sure you get the name of the person you spoke to) and then shut off the utilities and cancel the insurance. The bank will send out a crew to secure and winterize the home within 72 hours and then will monitor the home every 2 weeks or so to make sure it is safe. I had this done on thousands of properties under the same circumstances.

Good Luck

[cool33097]

I guess not in FL.

[erinb1975]

As the previous poster stated, you are responsible for the house until the bank takes it back. Because you are surrending in you bk doesn't mean you can just let it go. Still in your name.

This is not the information I was given by my insurance company. They absolutely REFUSE to insure a property that is not inhabited. I spoke directly with my agent regarding this. Once the mortgage company comes out and changes the locks, how would I be responsible if I can't even get into my own property?

[ssdsco]

Wow, what a melange of mis-information. As a current paralegal and a former executive in the default department of two of the largest banks in the country, I can unequivocally tell you that all you have to do is call the mortgage company(you can send a letter as well,certified is best) and let them know that you are no longer in the home(make sure you get the name of the person you spoke to) and then shut off the utilities and cancel the insurance. The bank will send out a crew to secure and winterize the home within 72 hours and then will monitor the home every 2 weeks or so to make sure it is safe. I had this done on thousands of properties under the same circumstances.

Good Luck

This is what GMAC did for me, with my agreement they could re-key the house. From there I called the utility companies and cancelled service.

[ssdsco]

This is not the information I was given by my insurance company. They absolutely REFUSE to insure a property that is not inhabited. I spoke directly with my agent regarding this. Once the mortgage company comes out and changes the locks, how would I be responsible if I can't even get into my own property?

I got the same from Allstate. GMAC ultimately got homeowners ins for a vacant house and they're putting it on my tab.

[AngelinaCat]

This is slightly off topic, but for those in Florida, keep in mind that because of all the hurricanes from Andrew '92 on through 2004 to present, it is becoming increasingly difficult for homeowners to get any type insurance coverage for their homes. Our long-standing company dropped us in December 2007, and it took our agent some work to find another insurer for us. Shortly after we had signed the agreement and made the first payment, we received notices from THAT company, that THEY were pulling out of the state and had sold our account to yet ANOTHER company.

If it keeps on, sooner or later we won't be able to get any kind of insurance in Florida.

[Help!]

Minnymouth raises an important point. It may make no sense to continue paying for insurance on the house itself, but the insurance coverage secured by the lender may not cover liability. For example, if our house burned to the ground right now we could care less since we no longer owe anything on the mortgages. If, however, someone was running through our yard, tripped on a broken sprinkler head, fractured their skull on our driveway and decided to file suit, we would be at risk because our BK has already been discharged. Our previous insurance company would not insure an unoccupied property, but we found another who would. We reduced the structure insurance to $100K and eliminated all other coverage... except for $500K in liability. It's $75/month.

[spell]

BigBoy2U, you're right in theory, but wrong in practice.

First things first, homeowners insurance and enough heat to keep pipes from bursting is pretty darned cheap.

Next, ask the mortgage company to take these over. They probably will for all of the reasons you've described. This house really is their problem now more than yours.

Lastly, what liability do you really have? One thing's clear, if some catastrophe happens to the tune of hundreds of thousands of dollars and it's possible you could be held liable... they can sue you. I'm not saying they'll win, but they can sue you.
But comparing apples to apples the costs of keeping insurance and heat vs. the cost to defend a lawsuit. I'd buy insurance every time.

The other valid point you miss as well is the possibility of this becoming post-filing debt. So, a week after you file your BK, the mailman slips on a pile of leaves that you didn't sweep up. This debt can't be discharged because it was incurred after your case was filed. Sure you can argue that the house really wasn't yours anymore. But again, fighting is expensive.