CAN I SELL MY HOUSE IF THE LOAN WASN’T REAFFIRMED IN A CHAPTER 7 BANKRUPTCY?

Question: Can I sell my house after the loan wasn’t reaffirmed in a Chapter 7 Bankruptcy?

Question : Debtor filed Chapter 7 years ago. In looking to get pre-qualified for a new home loan I find out that my loan wasn’t reaffirmed like I intended.  I have stayed current on all payments. My question is can I sell this house? What are my options?

Answer: In most Chapter 7 cases, a mortgage loan is not reaffirmed. Loans are usually not reaffirmed when they are part of a loan on real property. Most of the time, a Bankruptcy Judge will not even approve a reaffirmation on real property.

You say that you have made the payments so there is no dispute as to the payoff on the loan. The fact that you filed a Chapter 7 bankruptcy does not take away your ownership rights to the property. If you can find a buyer willing to pay as much or more than the payoff, you can sell the property to the buyer. The mortgage company is not entitled to anything more than it would have been entitled to receive if you had never filed a bankruptcy case.

You need to contact an attorney and go over the details of the case. Although it appears you could sell the property, you may have left out important details that would change the advice being given in this response.

Please call me, Nathan Davis, at 843.571.4042 to schedule an appointment so that we can discuss this matter further.

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WHAT HAPPENS IF I DON’T FILE BANKRUPTCY, AM I STUCK WITH THE DEBT?

Question: What Happens If I Don’t File Bankruptcy, Am I Stuck with the Debt?

Question Detail: My friend and I purchased a timeshare together. Our friendship apart, but he said he would pay the bill but couldn’t because he lost his job. Now the timeshare debt is in collections. My friend wants to file bankruptcy to discharge the debt.

Answer: The creditor is likely to come after you for the debt if the debt is discharged in a bankruptcy by your friend. You signed a document that probably makes you liable for the entire debt if the other person does not pay the debt. Of course, it is possible that you signed only as a buyer and your friend is the only one liable for repayment.

If you are liable for the entire debt or only a portion of the debt, you will either be forced to pay the debt, have a judgment entered against you or if you are lucky, simply have the fact that you did not pay the debt listed at the credit bureau which will damage your credit rating.

You need to have an attorney such as myself review the document to determine if you are liable and whether you are liable for the entire debt or only a portion of the debt. Meeting with an attorney such as me can help you find out what to expect and to make plans for your future.

Call me, Nathan Davis, at 843.571.4042 for an appointment to go over the documents with you.

Posted in Broke Emotionally & Financially, Filing Bankruptcy Issues, GENERAL INFORMATION, Making the Decision to do Something | Tagged , , , , , | Leave a comment

CAN THE BANK GARNISH MY WAGES FOR THE DEFICIENCY AFTER THEY REPOSSESSED MY CAR AND SOLD IT FOR LESS THAN THE AMOUNT OWED?

The bank repossessed the car and now the bank is saying that they will garnish my wages to get their money. I bought my car with a warranty and after it caught fire the insurance company refused to pay. I cannot afford to pay for the remaining amounts owed.

Wage Garnishment for South Carolina Residents is not proper for this kind of debt. I hope your employer is not a corporation located outside South Carolina as sometimes the employer will not understand that your wages are not subject to garnishment.

You need to talk to an attorney who can go after the lender. The threat to collect a debt by a wage garnishment is a violation of the South Carolina Fair Debt Collection Act. Taking the offensive and possibly even suing the lender may keep you from having a problem with an attempted wage garnishment. The lender may even be willing to forego any attempt to collect the debt as part of a settlement.

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MORTGAGE PAYMENTS AFTER A CHAPTER 7 DISCHARGE

You filed bankruptcy and the lender is still wanting you to make payments.  If you filed a Chapter 7 bankruptcy, you are no longer liable if you fail to make payments on your mortgage payment.

This does not mean that you get to keep the house and not pay the mortgage lien holder.  Even though you cannot be sued personally for a failure to pay the mortgage payments as they come due, the lender can still foreclose on the property.   There are two types of liability that are a part of the duty to make payments on the mortgage.   A lender can usually use both types of liability one called In personam liability and the other called In Rem liability.

After filing a Chapter 7 bankruptcy and obtaining your discharge, a debtor is only liable to a mortgage creditor for In Rem liability.  The creditor still has the right to sell the property to satisfy the indebtedness owed.  This is why a lender can foreclose on the property either before or after a Chapter 7 Bankruptcy discharge.

In personam liability gives the lender the right to look to a person for payment if the sale of the property did not pay the full amount owed to the lender.   A Chapter 7 bankruptcy only discharges or eliminates the In personam liability.

So no, after you get your discharge in a Chapter 7 bankruptcy, you do not have to make the mortgage payments.  If you do not make the payments, however, the lender can foreclose on the property.

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HOW CAN A CHAPTER 13 DEBTOR SELL PROPERTY?

A Chapter 13 debtor may not sell or dispose of property that he or she owns when a Chapter 13 Bankruptcy case is filed unless approval is first obtained from the Bankruptcy Court. Remember that property includes real property such as a home and personal property such as a car, furniture, jewelry or a mobile home. The way that permission is obtained is by having your attorney file a motion to sell property. Unfortunately there is no shortcut to obtaining this permission.

REQUIRING A MOTION TO SELL HELPS REDUCE FRAUD

A problem that sometimes occurs is a debtor will try to sell property at less than fair market value or sell the property to a friend or insider. The motion will set out who the buyer is and if there is any relationship between the debtor and buyer.

The motion will set out the selling price and other terms of the purchase. Sometimes a debtor will try to sell the property at a below market price and then receive some money on the side from the buyer.

THE MOTION WILL ALLOW ANY CREDITOR TO OBJECT TO THE TERMS

Usually, a creditor has a good idea of the value of the property to be sold. If the price or terms are not fair, the creditor can object to the sale. If an objection is filed, a hearing will be held and the Judge can then decide if the sale price and terms are fair to all of the creditors.

OTHER PERSONS CAN COME TO THE HEARING AND OUTBID THE BUYER

The threat of a new buyer coming will also keep the debtor honest. Once the motion to sell is made, the debtor may be forced to go through with the sale to a buyer that the debtor did not intend to buy the property.

SAFEGUARDS BUILT INTO THE SYSTEM WILL SLOW DOWN A SALE, BUT, THE REQUIREMENTS PROVIDE FOR A MORE TRUSTWORTHY PROCESS

Sometimes it seems that the rules on how a debtor can sell property are cumbersome. However, the fact is that the bad actors have forced rules to make sure that a debtor does not dispose of property improperly. The rules have to cover all sales.

A CHAPTER 13 DEBTOR SHOULD NEVER SELL OR DISPOSE OF PROPERTY WITHOUT FIRST CONTACTING AND DISCUSSING MATTERS WITH THEIR ATTORNEY.

If you have questions about your rights in a Chapter 13 bankruptcy case, contact me, Nathan Davis, to discuss your options. Of course, if you have your own attorney in a Chapter 13 case, you should contact your attorney.

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DOES HIRING A LAWBREAKER TO HELP YOU OBTAIN A LOAN MODIFICATION MAKE SENSE?

The Consumer Financial Protection Bureau (CFPB) has filed an action against a law firm regarding it participation in a loan modification program. The allegations are numerous including making promises about the ability of the consumer to obtain relief and provide certain disclosures required by law.

NEVER PAY ANY MONEY TO SOMEONE FOR A LOAN MODIFICATION BEFORE THEY HAVE GOTTEN YOU A COMPLETED LOAN MODIFICATION

The most important violation was, however, charging fees up-front when doing so violates Federal Law including the Consumer Financial Protection Act of 2010. Anyone who is claiming to help you and charging you a fee for the help before results are obtained is violating the law. So let’s see, would you hire a lawbreaker to keep your money safe or give you financial advice?

I know that no one wants to file bankruptcy to try and save their home. I also know that no one will want to lose their home. Using a lawbreaker is not going to increase your chances of getting a loan modification.

The law is clear. If the person or company claiming to want to help you is so honest and sincere, why is it violating the law. If someone is willing to break one law, are they willing to break other laws? Why would you trust anyone who is knowingly breaking the law.

There is an agency that works to try and obtain loan modifications if you live in the Charleston, South Carolina area. This agency is called Family Services, Inc. and it charges nothing to try and obtain the loan modification. It can be reached at 843-735-5530 and is funded by charitable donations.

Remember, no one can cause a miracle to occur, not even the lawbreaker.

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