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Ellen
Ellen, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36714
Experience:  Bankruptcy Lawyer. Experienced.
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we filed bankruptcy 3 years ago which was just discharged.

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we filed bankruptcy 3 years ago which was just discharged. Early in the bankruptcy we took back responsibility of a rental property we owned. We didn't realize how long the bankruptcy would take, and the property has been empty for the last 3 years. We have not paid the mortgage either. We would like to deed in lieu of forclosure. The bank had approved us and we have signed all the legal docutments. There is a LOC on the house worth $13,000, but the mortgage company negotiated a settlement of $6000. We have been asked to pay that but don't know if we are legally obligated, if we are still protected by the bankruptcy, or if the deed in lieu will be canceled if we refuse to pay it. The mortgage is held by Wells Fargo, the LOC is also Wells Fargo.
Hello,

Thank you for your question. My name is Ellen. I will do whatever I can to answer your questions!

You stated that you "took back responsibility of a rental property" - did you sign a reaffirmation agreement on the LOC?

What was the date of your discharge?
Customer: replied 3 years ago.


we didn't sign a reaffermation agreement. We paid $1000 to the bankruptcy court.


Thank you Kendrea – this is very good news for you.

The Chapter 7 bankruptcy discharge would typically discharge the LOC as well as the mortgage. The only exceptions to the discharge of the debt relating to the LLC and/or the mortgage would be if you reaffirmed the debt or if the bankruptcy court determined that the debt was nondischargeable. If neither occurred, the debt has been discharged

Please let me know if you need any clarification. I would be glad to assist you further if I can

Customer: replied 3 years ago.

So when we paid the bankrupcy court $1000 for the house, the LOC tied to the house is still discharged?


Yes. Usually the purpose of the payment directly to a ChapterXXXXXis to purchase the court's interest in the property - for example the trustee may have claimed that you were over exemption by $1000. A debt can only be reaffirmed by signing a reaffirmation

Please let me know if you need any clarification. I would be glad to assist you further if I can
Customer: replied 3 years ago.

If I need to ask a question about the Deed in lieu should I direct it to another attorney?

I can assist you.
Do you have an additional question now or did you mean in the future
Customer: replied 3 years ago.

So, for clarification... If we don't pay the LOC settlement, and the deed in lieu gets canceled, and the property ends up going into forclosure, are we responsible for anything? What I am asking is would it be better for us in the long run just to pay the settlement to avoid any future mess?


If we don't pay the LOC settlement, and the deed in lieu gets canceled, and the property ends up going into forclosure, are we responsible for anything?

You would not be liable for the LOC or mortgage since your personal liability was discharged in bankruptcy. If there is a homeowners association, you may be held liable for homeowners association fees that arose after the bankruptcy filing

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Thanks again and all the best to you.

Ellen
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