My brother had major medical bills in 2007 and 2008. He got behind on his bills and filed bankruptcy in Oct. 2008. His mortgage was not part of his bankruptcy. For reasons I don’t understand, he stopped paying his mortgage because he “could not afford it”. In January he was released from the bankruptcy and he still didn’t pay his mortgage. He got a letter two weeks ago saying his home was in foreclosure. He called the mortgage company and he doesn’t qualify for any of the new government programs because of the bankruptcy. He says because of his health insurance premium ($900 a month) and other expenses, he can’t afford to pay his mortgage each month. So, even if I helped him catch up on his payments, he could not make a monthly payment. The mortgage company told him that because of the bankruptcy he is not legally liable for the mortgage anymore but he is responsible for the lien. What does that mean? The mortgage company has set an auction date of April 22nd. But, he thought all this had to go through a court which would give him more time. The mortgage company said they don’t have to notify him of the sale or go to court to establish an Auction date. I don’t even know where to start to help him. Where can he go for help? Thank you!
Originally posted 2009-09-15 19:49:56.
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Best thing to do is talk with his lawyer who helped with the bankruptcy claim
Not all states require judicial foreclosures. They are expense and pointless. CA does not require it.
He should have been given a few months already to remedy this, he decided against that, for whatever reason.
He has to be out by May 22nd, he will have 30 days after the auction to leave. If he wants to fight it and add to his legal problems he will have another 3-4 weeks, depending on your state and how long it takes to evict someone.
I am not 100% about the lien thing. After the auction he can be held accountable for any shortage between the auction amount and the amount of money they gave him. They can either right it off, and he has to pay income tax on his proceeds, or they can make him pay the whole thing, which does require a hearing. There may be other, additional liens, which would follow him out of this.
You can help him by helping him locate another place to live. He can not simply stay in that property and refuse to repay the loan that bought it.
Virginia is a non-judicial foreclosure state meaning they can foreclose without court. You will get a notice of sale in the mail. But Virginia law only requires it be sent 14 days prior to sale!!!! The mortgage company does not know what they have to do and don’t because they hire companies which employ people like me to do the actual work. The people who answer the phones usually have no idea about foreclosures. Also about the lien and mortgage thing what they are saying is he does not have to pay due to the BK but they can take it if he does not basically. Mortgage or anything with collateral really like a car, does not really in a BK, otherwise everyone would buy a house and car they could not afford and file bankruptcy!
To answer your last question, I can’t say there is much he can do since he can’t afford the payments anyway. If you help him bring it current, maybe get a roomate? Rent it out? I think those are the only options since he can’t afford the house.