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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
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Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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I have filed bankruptcy and there has been found, by the trustee,

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I have filed bankruptcy and there has been found, by the trustee, and invalid mortgage. Which he is now selling the property under the bankruptcy. I received last week a motion requesting I leave by Oct 31st. I have an attorney who has not dealt with this before and seems to be laxed about the issue. I have 2 children and need more time than this. I have another concern about the issue. Under Bankruptcy, I have exemptions of over 46,000.00, does this mean I will profit from the auction?
Submitted: 4 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 4 years ago.
Hi,

I'm a little hazy on the facts here. I don't know if you want to reveal your case number XXXXX but if you do, then I can look up the motion and read it.

Re the "profit" issue, you are entitled to the first $20,200 in net proceeds received from the sale of the home, under the Ohio Homestead Exemption (ORC 2329.66(A)(1)(b)).

You may have other exemptions, that prevent certain designated property from being sold by the trustee, and which add up to $43,000. However, only the $20,200 protects your home.

Hope this helps.

Expert:  socrateaser replied 4 years ago.
Hi,

I'm a little hazy on the facts here. I don't know if you want to reveal your case number XXXXX but if you do, then I can look up the motion and read it.

Re the "profit" issue, you are entitled to the first $20,200 in net proceeds received from the sale of the home, under the Ohio Homestead Exemption (ORC 2329.66(A)(1)(b)).

You may have other exemptions, that prevent certain designated property from being sold by the trustee, and which add up to $46,000. However, only the $20,200 protects your home.

Hope this helps.

Customer: replied 4 years ago.

Hello,

 

My Case # XXXXX XXXXX I understand the exemtions for my wife and I are applicable in most cases, but this one is peculiar. My attorney has done many cases and never seen this. The Mortgage was not Notarized properly, and because of this, the Trustee has taken it. With this being said, is this still the case? Will I receive these funds. My attorney is starting to backpeddle from his earlier claim that we would receive this money, and is now saying he is not sure. Something regarding the banks and their right to equity. I guess I dont understand how it can be both ways. Either the bank has the right to the property and not the Trustee, or vice versa. But to say the trustee gets the property and then the bank receives my exemtions as "Right to Equity" is having it both ways. I have also done some investigating, from my previous question to you. I have time to respond to the motion, suggesting I vacate the property. I assume this will buy me more time. Thanks soooo much for your attention. We are both flipping out about this, No money and no time! Ugh....

Expert:  socrateaser replied 4 years ago.
In In re Zaptocky, No. 98-8091 (6th Cir. 04/16/1999) affirmed in Simon v. Chase Manhattan Bank, 250 F.3d 1020 (6th Cir. 05/22/2001) , the 6th Circuit Bankruptcy Appellate Panel held that the bankruptcy trustee could avoid an invalid mortgage, but that the lender retained an "equitable interest" in the value of the property.

This indicates that the bankruptcy court can grant an equitable lien in favor of your lender, and thereby force you to pay the lender the unpaid balance of the invalid mortgage. The lender's interest would defeat your homestead exemption, in my opinion.

However, it's not at all clear to me, that the net proceeds from the trustee's sale can simply be handed over to the lender -- because the fact that the lender may have an equitable interest that survives your bankruptcy, does not, by itself, determine the exact amount of that interest. The lender must sue you in a bankruptcy "adversary proceeding" to determine the value of its interest.

Re the motion and your having to move by Oct 31, I still haven't looked up the document -- hopefully, I will have time later this evening.

Hope this helps.
Customer: replied 4 years ago.
This makes sense to me now. I see how this is all taking place. Previously I expected it to be one or the other, as if to think the Trustee is a third party with his own interests. But instead he is acting on behalf of the creditors, it seems. I was confused by the entire situation and just needed to know if there were something beneficial to my wife and I. I dont expect to come out on top, but I did hope for the time most people are allowed, from the banks, for foreclosure. Again I cant thank you enough for explaining this, and your extreme attention to this for us! Also, I assume that any law suite afterwards, for the "equitable interest," would be above and beyond my exemption, as the mortgage was for 147,000.00 and my exemption only 46,000.00. Please let me know what your thoughts are on the motion to vacate. Thanks AgainCustomer
Expert:  socrateaser replied 4 years ago.
I've read the motion, and in my view, the court can force you to relinquish possession as of Oct 31, assuming that the property will be auctioned on Nov 6. You could ask the court to deny your dispossession until after the property is actually sold, on grounds that you will not unreasonably deny access to prospective buyers and that the property is in excellent condition and likely to sell for a higher price if furnished than unfurinshed, therefore the trustee and the creditors are actually benefitted by permitting you to remain in possession of the property.

This is a perfectly rational argument, however the court has discretion to go either way with the order. Ultimately, the trustee is correct that he/she can demand that you surrender possession.

Hope this helps.
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 34675
Experience: Attorney and Real Estate Broker -- Retired (mostly)
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socrateaser
socrateaser
Bankruptcy Lawyer
34675 Satisfied Customers
Attorney and Real Estate Broker -- Retired (mostly)