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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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Background We are currently 60 days behind in mortgage payments

Resolved Question:

We are currently 60 days behind in mortgage payments (last paid in April) on primary residence in PA. Bank has sent a default letter dated June 6th. Since we currently have no no income except unemployment, no assets to liquidate and have significant unsecured debts, we assume we will pass the means tests for filing for a Chap 7 by end of this month.
How long before we can expect a formal foreclosure notice and have to vacate the premises and, given the pending bankruptcy and liquidation, when or can we put some of our exempt possessions in self storage (before or after the filing?)

Thank you.
Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 6 years ago.
Hi JACustomer,
Foreclosure proceedings are suspended while the Bankruptcy is in progress (around 6 months from the Bankruptcy filing), unless the lender files a Motion with the Bankruptcy court - which is unlikely because it is costly.
The entire foreclosure process in Pennsylvania can take around 6 months from the date of default (plus the 6 months while a Bankruptcy is in progress). However, since the housing market is currently so distressed, it can easily take years for a house to sell in a foreclosure sale. You can stay in the house until around 30 days after it sells at a foreclosure sale.
You can put your property - whether exempt or not - in storage at any time. Where you keep your property would have no effect on your Bankruptcy.

I think this is what you wanted to know. If not, please let me know.
Thank you!
Customer: replied 6 years ago.
Thank you.
Yes, this is what I wanted to know re: foreclosure as given unemployment and financial straits, we need to determine our options based upon reasonable expectations of length of time we can stay in house.
My question regarding storage:
I guess I should restate..the question isn't where we keep our property having an effect on the bankruptcy but rather the bankruptcy having an effect on where and how we can keep our property...
As PA is a liens state, we are concerned that unless we PREpaid storage for the period of time that would encompass filing and possibly discarge of the bankruptcy, once we filed, any payment to the storage facility would be disallowed as a "preferential payment" to a creditor and non payment of monthly storage charges would find my possessions "foreclosed" upon by the storage facility.
Since the whole idea of the exercise is to safely store the possessions we would like to keep after foreclosure and bankruptcy, we are very concerned about doing all the work of sorting, packing and moving - incurring the expense of all this AND self storage costs only to have it all get swept up and away in bankruptcy proceedings.
Expert:  cfortunato replied 6 years ago.

There are no restrictions on payments to creditors after a Bankrutpcy is filed - only in the 90 days before filing, as certain payments to creditors in the 90 days before filing can be considered to be "preferences".

Additionally, payment for storage is not considered to be payment to a creditor - which can happen only if a debt is owed from beforehand, not when payment is being made for something being rendered at the time of payment.

Please let me know if this does not make sense to you.


Thank you!

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