QUESTION
Will a discharged chapter 7 bankruptcy protect us from foreclosure?
Asked on Jul 31st, 2012 on Bankruptcy - New York
More details to this question:
We filed chapter 7 bankruptcy and it was discharged July 2011. Since then my wife and I divorced. We own a timeshare and the payments are behind. They want us to sign a deed in lieu. Our question is, what if we don't sign? I know it will foreclose but can they come after us and garnish our wages etc.? Can or will they add on more fees and costs than the present amount? Are we protected by the chapter 7? We still have 3 homes now is foreclosure. So should we even bother with the deed in lieu? Our A1 credit has gone to the dogs anyway.
13 ANSWERS
Bankruptcy Attorney serving Seattle, WA
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The Law Office of Marc S. Stern
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A bankruptcy discharges the personal obligation. After bankruptcy, the creditor can foreclose the lien but cannot get a personal judgment.
Answered on Aug 27th, 2012 at 11:20 AM
If the debt was included in the chapter 7, they won't be able to come after you personally for any deficiency.
Answered on Aug 20th, 2012 at 4:50 PM
Real Estate Attorney serving New Port Richey, FL
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Jay W. Moreland, P.A.
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Yes, the bankruptcy will protect you. A secured creditor is still entitled to get its security back, however. The bankruptcy does not eliminate the lien. It does eliminate your personal liability on the debt. Thus they will only be able to get the property back.
If you owe more than the property is worth, that excess has been discharged in bankruptcy. So they cannot garnish your wages, etc. If you do not sign a deed in lieu of foreclosure, the creditor will have to go to the expense of foreclosing on the mortgage to get the property back.
If you do sign the deed in lieu, you will save the lender time and money. In either case you will not owe more. One exception for real estate is homeowner's association fees. Since those generally occur on a monthly basis, each month is a new bill.
So every bill for condo fees or homeowner's association dues that occurs after you filed your bankruptcy is not covered by your bankruptcy discharge. It is a post petition debt. In most cases the person who gets the property back will end up paying the condo fees to clear up the debt in order to sell the property.
The condo association or homeowner's association may not be willing to wait that long. If that happens, they may sue you and your bankruptcy won't stop it.
Answered on Aug 20th, 2012 at 4:49 PM
General Practice Attorney serving Crystal Lake, IL
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Bruning & Associates, P.C.
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If you got your debt discharged in a chapter 7 bankruptcy, then you are not liable for the balances on your properties unless you reaffirmed the debt as part of your bankruptcy process.
The banks want you to sign a deed in lieu of foreclosure because it saves them the time and expense of having to go through the foreclosure process in order to obtain title to the houses. Not signing doesn't create any obligation to you.
Answered on Aug 20th, 2012 at 4:49 PM
Chapter 7 Bankruptcy Attorney serving Clinton, MS
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Timothy Kevin Byrne Attorney at Law
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If you signed a reaffirmation of this debt or accepted this debt a an ongoing lease, you are responsible for the debt. Check to see if you signed any reaffirmation documents.
Answered on Aug 20th, 2012 at 4:48 PM
Meredith P. Ezzell
If you owned the timeshare on the date that you filed Chapter 7 and you did NOT reaffirm the debt, then your personal liability for the debt was discharged. You can sign a deed in lieu or let them foreclose, either way they cannot pursue you for any deficiency personally.
Answered on Aug 20th, 2012 at 4:47 PM
Bankruptcy Law Attorney serving Livingston, NJ
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Law Office of Stuart M. Nachbar, P.C.
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First of all, you do not state that you signed Reaffirmation Agreements, which lenders tried to get you to sign back then, so I will presume that none was signed, and that you have signed nothing since. Therefore, the Bankruptcy discharged your personal obligation on the timeshare and the three houses.
They can not add to your personal responsibility due to the C7 discharge and if they try to tell you otherwise, they are wrong. As for signing the Deed in Lieu, that is up to you, but if you do, make sure you read it very very carefully so that they do not try to slip in something that does not belong there. Have an attorney familiar with Bankruptcy review it.
Answered on Aug 20th, 2012 at 4:47 PM
No. The lender has the right to foreclose if they have not been paid.
Answered on Aug 20th, 2012 at 4:47 PM
Real Estate Attorney serving South Jordan, UT
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James T. Dunn P.C.
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You are protected by the CH 7 if the debt was listed. The reason they want a deed in lieu is because they cannot now pursue you for a deficiency due to the BK filing. A deed in lieu puts them on title now rather than 4 months of foreclosure process.
Answered on Aug 20th, 2012 at 4:47 PM
Just let the timeshare folks foreclose. No, a chapter 7 will not protect you. It will delay a foreclosure but not stop it altogether.
Answered on Aug 20th, 2012 at 4:47 PM
Immigration Law Attorney serving Hialeah, FL
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Hernandez & Suarez, PL
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Any financial problems you have after a bankruptcy discharge that was not included in the bankruptcy are not protected by the bankruptcy. If a person does not include all debts in the bankruptcy, that person assume those debts. Now, if the debts were included in the bankruptcy and not assumed, it is possible to let them go without affecting the credit or possibility of garnishing wages, etc., otherwise, all recourses creditors had without the person's bankruptcy are available to be enforced.
Answered on Aug 20th, 2012 at 4:46 PM
Bankruptcy & Debt Attorney serving Syracuse, NY
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Theodore Lyons Araujo
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No. The mortgage secures the Note, which requires payments. The Chapter 7 relieves you from liability for the Note payments, but the bank can still take the house in a foreclosure if you do not make your payments.
Answered on Aug 20th, 2012 at 4:42 PM
Bankruptcy Attorney serving Livonia, MI
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Charles J. Schneider, P.C.
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If you did not sign a reaffirmation agreement for those loans you do not owe the money. If you did then you owe the money.
Answered on Aug 20th, 2012 at 4:42 PM