Several Qs about foreclosure & bankruptcy

[KevFinnerty]

Background - I'm unemployed and broke. Drowning in CC debt and stopped paying those about 3 months ago (a separate issue). I haven't been able to pay my mortgage since April. I am in Pennsylvania. I have equity in the house and if I can sell it I can probably settle all my debts (a big IF though).

Chase intends to start foreclosure proceedings July 28th according to the letter they sent me, which listed a dollar amount of 2 months missed mortgate + 2 months late fees. Talking to them, since I have no income I am not eligible for any type of mortgage modification etc. They told me on the phone that if they receive my 2 months back mortgage by the end of this month they will not move to foreclose (and that I can pay the late fees later?). I am trying to raise the $$ but it does not look good. If I can that would just be a temporary stay of execution anyways. A relative is urging me to file for bankruptcy/Chpt 7 to gain time but I am not convinced that (a) I can do that in time and (b) that it is even a good idea overall for other reasons in my situation.



Some questions:

(1) If I cannot raise the 2 months back mortgage and Chase starts the foreclosure proceedings can I still put my house on the market/sell it myself regardless of all that?

(2) If it is even possible to file for Chpt 7 bankruptcy before July 31st, would that stop the foreclosure and is that even a good idea? I don't even think Chpt 7 is that good an idea for me, I don't really have many worthwhile assets to protect anyways from what I can understand and that would NOT protect my house in the long run anyways since the filing will only protect a tiny portion of my equity.

(3) If I can file for Chpt 7 in time to stop the foreclosure, assuming later I am able to sell the house and pay my debts - can I "unfile" the bankruptcy and settle with my creditors or is that nonsensical?

(4) Is is possible to file for Chpt 7 AFTER the foreclosing stuff starts and stop it from proceeding?

(5) If by some miracle I do raise the $$ to pay the May + June mortgage, I then will be missing July (which I can't pay), then August etc etc - so my question is, again assuming I can raise the 2 month $$, how long will it go until I am back in the exact same situation with Chase intending to foreclose by a new date??? Will it be immediate - or take another 2 months like into September????

THANKS for any advice.

[feelingnutsy]

I can't address every question that you've asked---but here's a little bit---

2/4.filing for bk before foreclosure will stop the fc temporary because of the
automatic stay---but chances are very high from what you've said that Chase
will file a motion to lift the stay almost immediately---and it will be granted.
You don't say if you're underwater on your house or if you want to keep it.
Is it worth keeping your house?---look at the situation long-term.

You said that you were drowning in debit---but not how much you owe.

It's possible that if you caught up with your mortagage payments---it would
push the foreclosure back---and depending on whether Pennsylvania is a fast
foreclosure state---since it doesn't seem to have the horrendous backlog of
foreclosed homes like Florida/Nevada/California---it might move faster for you.

3.You can have a C7 dismissed---but it's not a good idea.

[jdcat]

How much equity do you have in the home? I hope those who know better can add to these thoughts of mine. If you have a substantial amount of equity in the home and you file chapter 7 the bankruptcy trustee could take your home to liquidate it into funds to pay your creditors, and you'd be able to keep the portion of the equity that is exempt through the homestead exemption.

It sounds like you are going to loose the house and you're trying to put it off for as long as possible. I would seriously consider letting the trustee take your home so that you could at least walk away from this ordeal with something. Your creditors would receive a portion from the proceeds from the sale of your home and after that your obligation to them would be wiped out by the chapter 7 discharge.

This is just an idea and would only really be a good idea if you have substantial equity.

[KevFinnerty]

Thanks for replying people. Some answers to your Q's about my situation, in hopes of more answers.

You don't say if you're underwater on your house or if you want to keep it.
Is it worth keeping your house?---look at the situation long-term.

Selling my house is my only way out of debt that I can see, although of course I would rather keep it. I have been putting selling it off hoping for a miracle that hasn't happened I guess.

I am 2 mortgage payments (going on 3 counting July) behind on the house (about $2400). My mortgage principle left is about 75k.

You said that you were drowning in debit---but not how much you owe.

Not counting my mortgage, about 100k in "unsecured" debt.

It's possible that if you caught up with your mortagage payments---it would
push the foreclosure back---and depending on whether Pennsylvania is a fast
foreclosure state---since it doesn't seem to have the horrendous backlog of
foreclosed homes like Florida/Nevada/California---it might move faster for you.

Right, the bank told me if I sent them $2400 by end of month they would stop the foreclosure. I am trying to raise that $$...

But assuming I can do that and stop the foreclosure - I am then back in a hole, not being able to pay July, not being able to pay August - and I am wondering when will the bank start up foreclosure again? Do they have to wait another 2 months and go through the whole 21 day/whatever notice thing or can they start it up again right away, saying that I am late on my July payment too??? They didn't tell me that, but maybe they don't want to tell me that.

[KevFinnerty]

Thanks for replying. I'll try to give ya more info...

How much equity do you have in the home?

That is a thorny question. My mortgage has about 75k left on it. Houses similar to mine are listing in my neighborhood for anywheres around $180-200k. However I will not be able to fix mine up to sell, doing things like repainting/replacing carpets/windows/etc like other people do. So I expect mine would go for less. And of course there is the question of whether it would even sell at all, as there are many many homes up for sale in this area, for example some cheaper than what I would hope to get for mine.

If you have a substantial amount of equity in the home and you file chapter 7 the bankruptcy trustee could take your home to liquidate it into funds to pay your creditors, and you'd be able to keep the portion of the equity that is exempt through the homestead exemption.

Right, but the homestead exemption sucks as compared to what I could *possibly* get if I sell it. I think it is only like $20,000 (federal exemption). My state (PA) has no home exemption allowed as I understand it.

Is that what this legalese about PA exemption means or am I misinterpreting???
PA - Homestead:
None, but tenancies by the entirety are exempt without limit as to debts of
one spouse

On the one hand they say "None" for home exemptions but then there is a disclaimer about "tenancies by the entirety as to debts of one spouse" that makes no sense to me??????

I would seriously consider letting the trustee take your home so that you could at least walk away from this ordeal with something. Your creditors would receive a portion from the proceeds from the sale of your home and after that your obligation to them would be wiped out by the chapter 7 discharge.
This is just an idea and would only really be a good idea if you have substantial equity.

If the trustee takes the house - how does it then get converted to "equity"? What price $$ is decided upon? Who decides the number? Is it left to a sheriff sale? Or what? How does all that work??

And is the ramifications of bankruptcy, losing the house, settling that way with creditors, worse or better than if I were able to sell the house and settle with creditors without bankruptcy??? I don't think I would have $$ left over after sale of my house & settling btw, even if I settle it myself...

[KevFinnerty]

I would seriously consider letting the trustee take your home so that you could at least walk away from this ordeal with something. Your creditors would receive a portion from the proceeds from the sale of your home and after that your obligation to them would be wiped out by the chapter 7 discharge.
This is just an idea and would only really be a good idea if you have substantial equity.

I think I may be misunderstanding some key concepts. Let me ask about this.

Does this mean, that say for example if I took the federal exemptions, and that allows for $20,000 for a home (if I'm right), does that mean that whatever price the trustee decides he can get for the house (see my other above as I don't understand this at all) that for sake of argument let's say is $50,000, that he then takes $20,000 out of that and says I can keep that???? And that what's left ($30,000 in this unrealistic example plus whatever assets I have) then gets divided amongst the creditors????

[jdcat]

Hi again,

The way I understand it is the trustee would ask you what you believe the value of your home is. How you go about figuring that out can be tricky. You either use your best honest guess or have an appraisal done if you can afford one or a comparative market analysis done by a real estate agent.

If the trustee decides it would be worth his/her time and effort, and I'm not sure how any trustee goes about figuring out the actual reasonable selling price of real estate or which homes are worth the effort to try and sell, he/she would then hire a real estate agent to place your home up for sale I believe. I'm not sure if there is an actual technical term for this type of sale.

After the home sells and the mortgage is paid what ever is left will be distributed to your creditors minus your homestead exemption. So your creditors could end up with very little or quite a bit depending on what price the trustee can get for your home. But in this scenario you would at least walk away with your exempted amount.

If I were you I would make an appointment with a bankruptcy attorney and find out as much about this as you can as soon as you can. The consults are usually always free and you can interview several attorneys, as many as you want. Experienced attorneys in your area will know just how this sort of thing is handled in your district and advise you much better than we can here.

That being said though....you sound like your in a really tough spot and will end up loosing your house either way. And you don't know if you could sell your house to satisfy your debt in full. That is one area that bankruptcy takes care of for you. When you are under bankruptcy protection your creditors will only be entitled to what your bankruptcy trustee says they are entitled to. Your creditors will not be able to come after you for any deficiencies later on. The slate will literally be wiped clean after your trustee takes care of dispersing the funds from the sale of your home. If the trustee goes after your home.

I hope others will chime in who know more about all of this. So don't take everything I've said as written in stone. There could be more to it than I'm aware of. I think there are issues with filing chapter 7 when your mortgage is in arrears, so you need to find out about that. I'd definitely get in for those free consults though before your down to the last minute before foreclosure. Also, something else to consider is this...before catching up on your mortgage make sure you won't be needing that money to retain/pay a bankruptcy attorney.

I'm sorry your in such a rough situation and I hope the best for you.

[helpmeout]

Rather than guessing what the value is, why don't you contact a real estate agent and get a fair market evaluation?

Also, if you have equity over the exemption amount plus 10% for selling fees (real estate agent commission), the Trustee will sell the house. After it is sold, you would get the exemption amount, the Trustee their fee and the creditors the rest.

[KevFinnerty]

Thanks all...I am trying to get some "free" legal consult advice. But I have no money to pay attorneys to file for me though, at least not yet - I am scrambling now trying to sell possessions/raise $$ but it is not going well.

[KevFinnerty]

Also, if you have equity over the exemption amount plus 10% for selling fees (real estate agent commission), the Trustee will sell the house. After it is sold, you would get the exemption amount, the Trustee their fee and the creditors the rest.

Would the mortgage company be considered to be one of those creditors? Or just my unsecured debt creditors?

At some point here it was said that the mortgage company can file to stop the bk "stay" and continue the foreclosure - so does this mean that Chpt 7 really doesn't matter anyways????? (I think I better start a different thread on this)

[jdcat]

At some point here it was said that the mortgage company can file to stop the bk "stay" and continue the foreclosure - so does this mean that Chpt 7 really doesn't matter anyways????? (I think I better start a different thread on this)

That is a good question and is something I have wondered about in the past. I've been assuming that since the home would be part of the chapter 7 estate that the bankruptcy trustee would have "first dibs" on the property.

I wish I could help more but I just don't have the knowledge required to do so.

[KevFinnerty]

Hey thanks for trying JDCAT. Your answers have been helpful.

[secondtimer]

Maybe you could send Furio over to talk to the Prez of Chase

[KevFinnerty]

Maybe you could send Furio over to talk to the Prez of Chase

I would but he is over in Italy & I'm stuck in purgatory.



Nice catch btw! For those that don't know, my handle here (KevFinnerty) refers to the identity (Kevin Finnerty) that Tony Soprano got stuck with in purgatory, while he was in a coma after being shot. In the TV show THE SOPRANOS that is....

[ccaplinger]

I'm going to answer question 2 only since everyone has answered most everything else. Is it possible to file Chapter 7 by July 31? The U.S. Federal Government has made it much more difficult for anyone to file. There are a few things that need to be done to file. You have to pay the entire attorney fee upfront before they will file. You also have to go through debt counseling from a credit counseling service which can cost anywhere from $50-150. The attorney fee can be anything from $1000 and up. So if you can't find enough money to even pay one month I doubt you can come up with enough to file bankruptcy either.