We know that surrendering your house is a painful topic; but, it may be necessary and could be a big relief to be out from under huge mortgage payments.  If you cannot pay past, current, and future mortgage payments, it’s likely in your best interest to surrender your house to the lender during the bankruptcy process. 

If you can make future payments and you’re current with your mortgage, surrender is not necessary, even if you file bankruptcy.  Many people go through bankruptcy and keep their house; others don’t.  Whether you keep your house or not depends upon whether you can make the mortgage payments.

Is Surrender the Same as Foreclosure?

Surrender is similar to, but not the same as, foreclosure.  Foreclosure is outside the bankruptcy process; whereas, surrender may be part of the bankruptcy process.  In addition, the financial consequences of surrender versus foreclosure are likely huge.

Can’t I Just Move Out of My House?

Neither moving out of your house nor filing bankruptcy takes your name off the deed.  Even if you move out, file bankruptcy, and stop making payments, you still own the house, until it’s surrendered.

Surrendering is a legal procedure which takes your name off the deed and puts the lender’s name on the deed.  Only then can the lender sell the property to recoup the money loaned to you.

How Surrender Works

• You file bankruptcy.  When the Bankruptcy Court accepts your petition, it issues an automatic “stay.” 

 

• The mortgage holder will file a “Motion for Relief from Stay,” so it can move forward with taking back your house.

 

• Three weeks later (or longer), the mortgage holder will receive an “Order Lifting the Automatic Stay” from the court.

 

• The mortgage holder must then give you 90 days notice of its intent to take your house. 

Why Should I Surrender My House?

Often clients ask why they should surrender their house and not just wait for the mortgage holder to foreclose.  The benefit to surrender, which is part of the bankruptcy process, is that you don’t have to pay the deficiency.

The deficiency is the difference between what you owe on the house and what the mortgage holder received when it sold the property.  In today’s economy, this is likely thousands and thousands of dollars.  On the other hand, if the mortgage holder forecloses on your property, you still owe this difference.

Where Do I Get Help Surrendering My House?

Surrendering your house and bankruptcy are specialized areas of law; be sure your attorney focuses his or her practice on bankruptcy.  We focus our practice on bankruptcy law and help people just like you.  You can reach us at 513-793-6555 or Thomasjr@geygan.com. 

We will gently walk you through how to surrender your house so you don’t owe a deficiency and stress is reduced, to the full extent possible.  We look forward to your call or email.

 

Are you a small business owner who anticipates filing for bankruptcy protection?   Reorganization, permitted under bankruptcy laws, may allow your business to continue under more favorable terms.  You have the opportunity to renegotiate contracts to give you a better deal.   But, do you know how to protect your business income through the bankruptcy process? 

 If you’re like most small business owners, you need your business’ future income to make your fresh start a success.  It may surprise you to know that a qualified bankruptcy attorney may advise you to take a vacation before your business files bankruptcy, instead of keeping your shoulder to the grindstone. 

Why?  It seems counterintuitive.  After all, if you’re contemplating bankruptcy, you need all the income you can get.

Here’s why.  Any income that is owed to you, when you file bankruptcy, will be taken by the bankruptcy trustee and will be given to your creditors.  So, don’t create excess income.   Instead, let any income pay fixed expenses such salaries, rent, insurance, mortgage, equipment leases, and memberships. 

Wait until after you filed bankruptcy to generate income.  You need that income to make a go of it, after bankruptcy.  Here’s how it works.

As part of your small business bankruptcy petition, you must provide details on all business assets, accounts receivables, and unbilled work in progress.  The bankruptcy trustee will try to collect monies from accounts receivables using a demand letter; demand letters are successful in collecting monies already owed to you.  The trustee gives the money to your creditors.   (The trustee will also try to collect unbilled work in progress; collecting for unbilled work isn’t usually successful until the work has been completed.) 

Don’t be afraid to take a break; if your business keeps functioning as is, you’ll lose accounts receivables to your creditors; this means that you won’t have that income to keep your business going when you come out of bankruptcy. 

If you notify your clients ahead of time, they are likely to understand.  Explain that because of the current economic situation, your business needs to reorganize.  Further explain that their work will get done and give them a date when it will be completed.  Set appropriate expectations.

Your qualified small business bankruptcy lawyers can give you exact timing of work stoppage and explain how to use any income that comes in before filing bankruptcy, how to communicate with your clients, and how to use bankruptcy’s fresh start to have a successful future.

Where Do I Get Help Filing Bankruptcy?

Bankruptcy is a very specialized area of law; be sure your attorney focuses his or her practice on bankruptcy.  We focus our practice on bankruptcy law and help people just like you.  You can reach us at 513-793-6555 or Thomasjr@geygan.com. 

We will gently walk you through the bankruptcy process, answer your questions, analyze your case, and aggressively fight for your legal rights.  We look forward to your call or email.