What is "Motion to Abandon"....help

[indebt00]

My Sister just went thru a ch 7, discharged in Sept but with stipulations about forfeiting a tax refund for 2011....so the Trustee has not "closed" the case yet.

now....my Sister has been current all along on her mortage and wants to keep the house....but she is currently going thru a divorce and just lost her job....so she is trying for a loan mod on the mortgage.

The mortgage company is telling her (and her lawyer) they want a "Motion to Abandon" before they will process an applicatoin for a loan mod. They want the final notes from the trustee.....and she has told them that he won't do those until early 2011. they say thay she can't even apply for a mod yet. and they told the lawyer they want this abandonment thing.....he is confused too...

So basically they want her to agree to abandon the property...therefor take away her rights to own it??? what?? I am lost.....

She did NOT sign a reafirmation agreement....

does anyone know what all this really means? I told her to absolutely not sign the motion.....the lawyer doesn't even really understand....alhtough loan mod is not his thing

THANKS for any help !!!

[despritfreya]

What they want is the removal of the property from the bk estate. Normally this happens when the case is closed but since this is an asset case, the closing will not happen for a while.

Contact the Trustee. Explain the situation. As the Trustee to file a "Notice of Abandonment". If the Trustee agrees and follows through the property will be abandoned within 14 days of the filing of the Notice. Not a big deal so long as there is no non-exempt equity in the property.

Des.

[goodyphilips]

But if the notice come through and the property has to be abandoned then i believe she will have no authority over the house and will not be in a position to avoid foreclosure through load mod. or any other means. isn't it?

[despritfreya]

But if the notice come through and the property has to be abandoned then i believe she will have no authority over the house and will not be in a position to avoid foreclosure through load mod. or any other means. isn't it?

As it relates to the creditor's ability to pursue a foreclosure, your assessment may be true but all the creditor has to do is file a Motion for Relief if it really wants the home. A Chapter 7 does not help you save the home therefore, no harm - no foul.

OP continues to have "authority" over the home until it is lost to a foreclosure. That "authority" however is no guarantee that OP will be able to save the home through a loan modification as agreeing to such is totally up to the lender regardless of the bk.

Des.

[AngelinaCatHub]

As it relates to the creditor's ability to pursue a foreclosure, your assessment may be true but all the creditor has to do is file a Motion for Relief if it really wants the home. A Chapter 7 does not help you save the home therefore, no harm - no foul.

OP continues to have "authority" over the home until it is lost to a foreclosure. That "authority" however is no guarantee that OP will be able to save the home through a loan modification as agreeing to such is totally up to the lender regardless of the bk.

Des.

Yes but in this economy would the lender wish to have another empty house? If she does do a loan mod, that is tantamount to a new loan and would not be protected by the C7 laws so it would equate to a reaffirmation. A benefit for the lender as she is stuck to pay for the house or get a Judgment. 'Hub

[Pandora]

Yes but in this economy would the lender wish to have another empty house? If she does do a loan mod, that is tantamount to a new loan and would not be protected by the C7 laws so it would equate to a reaffirmation. A benefit for the lender as she is stuck to pay for the house or get a Judgment. 'Hub

I don't believe a loan mod would constitute a reaffirmation - you're not getting a new loan, you're just modifying your original terms. Most loan mods for a CH. 7 on a property that wasn't reaffirmed state that the discharge is still effective if the owner desires to walk away later on.

I think the OP's sister needs to look at the bigger picture - no job = no income, loan mod or no. Any loan mod will require proof of income on a steady basis, and paperwork out the wazoo repeatedly sent to the lender due to "never receiving" or "was lost" (yeah right...). Even with another job down the line, with any loan mod if you plan to stay in it, you need to look at it long term and past that magic 5 year mark (with HAMP anyway). The rate is going to increase and the ability to make that payment when it does needs to be taken into consideration from the very start.

[goodyphilips]

As it relates to the creditor's ability to pursue a foreclosure, your assessment may be true but all the creditor has to do is file a Motion for Relief if it really wants the home. A Chapter 7 does not help you save the home therefore, no harm - no foul.

OP continues to have "authority" over the home until it is lost to a foreclosure. That "authority" however is no guarantee that OP will be able to save the home through a loan modification as agreeing to such is totally up to the lender regardless of the bk.

Des.

Thanks a lot for your explanation. but what does motion for relief entails? does it allows you to continue ownership and give you reprieve from payments temperorily?

[despritfreya]

...but what does motion for relief entails? does it allows you to continue ownership and give you reprieve from payments temperorily?

Upon the filing of the bk, your lender is stopped dead in its tracks as it relates to enforcing any State authorized remedy to collect/take back its property. Many folks, simply wanting a few more months in the home, will file the bk just prior to the foreclosure. This will delay the loss of the property thus giving the debtor maybe 3 to 4 months extra time in the home. A lender will file a Motion for Relief to remove the bk court barrier to collection.

A motion for relief, when granted, takes the property out of the protection of the bk court thus allowing the lender to either begin or complete its foreclosure - if payments are delinquent. The lender files the Motion asserting that it is not adequately protected and requests that the Stay be lifted so that it can pursue its State court remedies. If no Response is filed within 14 days, a few days later the lender submits an Order granting the Motion which is then signed by the Judge.

Practice pointer: Since a Chapter 7 is not used to "save" a home, unless there is some strategic reason for responding, filing a Response makes little sense since the Stay is lifted as it pertains to the Debtor upon entry of the Discharge, some 4 months after the case is filed.

Des

[goodyphilips]

Thanks Des! you explained it so nicely.

[Clabbergirl]

Is your sister a co-signer on any debts with her husband? And if so, is there any way she can put the divorce off until the BK is done? I'm learning the very hard way that it's often better to file BK first because then there is no marital debt to assign to each person in the divorce. If she has marital debt assigned in a divorce decree, filing BK will release her from the debt responsibility to her creditors, but not the responsibility to her ex-spouse of doing what the divorce decree says she will. I urge you to check with her on joint debts before her divorce is finalized.

[indebt00]

Is your sister a co-signer on any debts with her husband? And if so, is there any way she can put the divorce off until the BK is done? I'm learning the very hard way that it's often better to file BK first because then there is no marital debt to assign to each person in the divorce. If she has marital debt assigned in a divorce decree, filing BK will release her from the debt responsibility to her creditors, but not the responsibility to her ex-spouse of doing what the divorce decree says she will. I urge you to check with her on joint debts before her divorce is finalized.

I am a little confused....the BK is done....was joint....there is no marital debt except cars and house....they have agreed who gets what on those....

she has not finalized the divorce....in the very beginning stages.

She wants to save the house no matter what at this point....She is NOT planning on foreclosing....she is NOT planning on falling any more behind.

She DOES want to get a loan mod if possible....Would it be better to put off divorce and have her and Husband apply for Loan mod due to her job loss?? then they divorce later?????
Is it moot point to apply for a mod if you don't have a job? that is one of the qualifying reasons to apply for her bank....ugh...this is all so confusing....