Sometimes, when people file for Chapter 7 bankruptcy, they will receive a copy of a notice of property abandonment sent by their trustee. This may cause some alarm.
However, this notice of property abandonment often means that the trustee is abandoning any interest he or she has in the property. Thus, it usually leaves the filer’s interest in the property intact. The reasons for this notice are detailed below.
If you have received a Chapter 7 bankruptcy property abandonment notice, and would like to know more about what it means, you may connect with a local attorney for a free consultation:
When a person files for bankruptcy, a court order known as the automatic stay kicks in. This stops all collection actions against a filer, including foreclosure on their home.
After the initial bankruptcy filing, a bankruptcy estate is also created for each filer, which is administered by a court-appointed overseer called the trustee. The trustee's job is to look for assets that may be liquidated in order to meet the filer's debts.
Often, a filer's assets are exempt from liquidation, which leaves the creditors empty-handed. Here's how the property abandonment comes into play:
In brief, the property abandonment notice simply means that the trustee is giving up any claim to the property and giving control back to the bankruptcy filer, and any other party that has an interest in the property.
In addition to the formal notice of abandonment discussed above, a separate action from this legal idea is simply abandoning the property.
If a filer has fallen underwater on their mortgage, and wishes to escape their obligation, he or she may surrender the property.
By surrendering their rights to their home, bankruptcy filers are often able to escape any liability resulting from the subsequent sale of their property, as well as possibly discharge any remaining mortgage debt as part of their Chapter 7 case.
Thus, Chapter 7 bankruptcy may provide a welcome form of relief for filers who are looking to leave their homes without incurring future liability.
To learn more about Chapter 7 and property abandonment, connect with a lawyer who practices bankruptcy today. Fill out the quick case review form below to get started now.
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