One lesson that’s become clear over my years as a debt consolidation lawyer and bankruptcy lawyer in Anderson is that each situation is different. The new bankruptcy laws of Indiana set out the general rules, but sometimes bankruptcy judges need to make adjustments in order to fit the circumstances. And what I’ve found is that telling the stories of these unusual rulings helps my Bankruptcy in Indiana readers and my clients understand the way the bankruptcy process works.
Ninety nine times out of a hundred, when a client who owns a home visits one of the Zuckerberg bankruptcy law offices, that client will want us to help stop foreclosure on the home. (Whether that is going to turn out to be the best tactic in that situation is up for discussion, but homeowners’ first instinct is to do everything they can to keep the house).
So, it was very unusual and interesting when one of the Columbus bankruptcy lawyers who is my colleague read about an interesting case where a debtor was actually begging the court to have the bank foreclose on her home!
To help readers understand what happened here, I need to offer a reminder:
A home mortgage is a secured loan. The house itself is the collateral for the money the bank lends you.
Here’s the general sequence of events:
Sheryl’s home was damaged in a flood.
S. filed bankruptcy Chapter 7 and most of her debts were discharged.
She moved into a new home.
Meanwhile, the mortgage lender on house #1 changed the locks, posted “No trespassing” signs, but did not officially foreclose.
The homeowners’ association fees were not being paid, and late fees were being charged.
- Sheryl sued the lender, demanding that it either foreclose or sell the ruined property.
Here is where the unusual part comes in: The bankruptcy judge ruled that Sheryl’s case could be re-opened so that the trustee could sell the property and pay the homeowners’ association. The court reasoning was that Sheryl was being asked to make payments on a debt to which she no longer had any real connection, she was unable to make a fresh financial start (which is what bankruptcy is all about)!
All good bankruptcy attorneys in Indiana know that this outcome is very, very rare. The new bankruptcy laws of Indiana, for example, do require the owner of any home to remain responsible for homeowners’ association fees. Plus, as I said earlier, homeowners who want to help stop foreclosure need to try and qualify under Chapter 13 bankruptcy law, not bankruptcy chapter 7.
I certainly can’t guarantee that all bankruptcy judges will provide such unusual interpretations of the law. But, as a longtime practitioner of Indiana bankruptcy law, I was gratified to learn about this one case of individualized attention!
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg