Changed my mind on keeping the house, what are my options?

[bkbirdie]

Hi everyone,

When I filed Ch. 7 in October, I stated that I wanted to keep my house, and signed a paper stating that was my intention. At my 341 hearing in December, I also stated to the trustee that I wanted to keep it. I owe about $188,600 (first mortgage only) and I know I cannot sell it for that, despite having made many improvements to the property. It's been a money pit, and I'm feeling overwhelmed with all the maintenance and future projects/repairs looming. Also, I found out that I need to have another surgery, which I need to save for.

As of now, I am current on my mortgage payments of $1,262/month. I have not signed a formal reaffirmation agreement, in fact GMAC didn't even send one to my attorney. (I did sign a reaffirmation of my auto loan with USAA, which I'm okay with.) My bankruptcy is still open, the last day for objections is February 5th. I found out that my roommate is moving out of the country in July, and I really don't want to take on another renter (it's been a pain in the butt), yet I can't afford to stay unless I have one. I can rent a nice two bedroom apartment for anywhere from $700-$850, and I did find an apartment complex that said they would work with me with my credit.

My questions are: If I miss next month's mortgage payment, do I have to be out of the house by the end of the month because my case is still open? Is there a separate process one must go through to "surrender" the house during the bankruptcy, vs. just letting it foreclose afterward? Do I need to tell my attorney and fill out any other paperwork to give the house back to the bank? Am I "stuck" with the house now because I signed that it was my intent to keep it? I'm just worried, because I don't have the money for deposits, movers, etc, right now, but long-term I can't afford to stay in the house. I'd need at least 3 or 4 months mortgage-free in order to move. When should I stop paying my mortgage, after the bankruptcy closes? It comes out of my account automatically, and I'd have to call GMAC to stop the payments, and I don't know when I should do this. I'm scared to stop, but I really need to let the house go. I'm in Colorado, by the way. Sorry if this post was a little long, I just wanted to be thorough, and I'm scared and have a lot of questions. Thanks in advance for any help!

[keepinitreal]

The first thing I would recommend you do is call GMAC and tell them you changed your mind about having your mortgage payment automatically deducted from your checking account. They'll give you a fax number or mailing address for you to send them a signed and dated formal request.

Also, open a new checking account and have any auto-deposits transferred to your new account. After a couple of months, you can cancel your old checking account if GMAC is still taking out mortgage payments.

After that, you can proceed to rent a new place, or stay at your house, how ever you see fit.

[deepend]

I am no expert, but about to go through the same thing. I'm in Oklahoma, so we are in similiar boats I think because OK & CO aren't as overwhelmed with foreclosure properties as some other states like MI, CA, AZ. I'm wondering if that has any effect on the speed of the process or not.

As for how to do it, it's my understanding that if you did not sign a reaffirmation with the lender, the mortgage will be IIB and your responsibility for it discharged with all your other debt. Stating an intent to keep the house is not the same as affirming the loan with the lender. I could be way off.

I intend to just stop paying and let the foreclosure process proceed. I saw another post that someone in OKC has now gone a year with paying and the lender has still not completed the foreclosure process. I don't know if that's typical or not, and am not sure where to look to find out.

I expect it depends on your state, and whether it's a judicial process state (meaning the foreclosure has to go to court and takes longer) or not, and your how your lender operates.

[DebtEnder]

If you know you don't want to keep the house stop paying now. Don't pay another penny come next month. The last dollar they get from you is what you sent them before today. From what I can see Colorado timeline is as follows.

90 days from last payment they send you a NOD, stating they intend to foreclose. This is not a fact, just what they can do, your timeline may be much longer but should not be shorter.

After the 90 days there should be the notice of election and then 120 days after that the auction of the house.

After that there is a 75 day redemption period where you can stay in the house. This would allow you to buy the house, or sell it and pay off the balance in full plus fees.

After the 90 days then the 120 then the 75. THEN they can do an eviction process on you, which still would require some extra time before they could at last send the goons after you.

You have some time it looks like.

[bkbirdie]

Thank you, keepinitreal, deepend, and DebtEnder. You all have been very helpful, and I'm not as worried now. I will call GMAC tomorrow to cancel my automatic payment.

(deepend, I have ties to OKC and have always loved visiting. The Omniplex is especially cool.)

[Flamingo]

You also need to advise your attorney inasmuch as you signed the intention and advised the trustee that you want to keep the house, you are in active Chapter 7 and have changed your mind. When in BK, the first person you consult with when there are major financial decisions is the attorney handling your BK. Best of luck to you!

[deepend]

Yes, we love the Omniplex and the Zoo is right there too. Good (cheap-ish) fun!
Good luck - sounds like you have quite awhile before you get to the end of your process in Colorado.

DebtEnder, can I ask where you found that info for Colorado? I'l like to find the same information for OK.

[bkbirdie]

Thank you all for your well wishes. I do have an appointment with my attorney next week, and I'll definitely discuss it with him then. I just hope I can stay at least 3-4 months mortgage free so I can afford to move. Otherwise, I don't know what I'll do. Hopefully they will honor the timeline that DebtEnder said.

[Argh!]

All my attorney had me do was file an amendment to my return (cost me $100)

I'm in the same boat as you.l

[killinstinct]

We surrendered our house in our BK, still no word on auction, etc. I just got certified mail from Chase the other day basically begging us to call and 'work something out', same letter we got months ago. Been there, done that. No help. "f" off. It's been a year now since I made a payment and still no evidence of auction, etc. Should have stayed a while rent free i think.