We are a debt relief agency. We provide assistance to consumerrs filing for relief under the Federal Bankruptcy Code.
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When a debtor files a Massachusetts Chapter 7 bankruptcy there is an automatic stay that stops most collection actions, including foreclosure and eviction proceedings. Notwithstanding, the bankruptcy will protect the debtor for only a short time. Holders of mortgages that are delinquent may file motions for relief from the stay for the purpose of foreclosing, and for permission to evict the owner after foreclosure. If such a motion is allowed, Massachusetts state law is followed to complete the foreclosure sale. This can take months. After the foreclosure auction, the holder of the mortgage may have ownership, but it must acquire possession via a summary process action, otherwise known as an eviction. This can lead to further delays in the lender recovering possession. To save time, the lender will often negotiate with the former property owner. A former Chapter 7 debtor-client who experienced foreclosure was recently offered $4,000 to move out and allow the bank to have immediate possession.
I'm often asked whether a buyer of Massachusetts real estate should spend the money to purchase owner's title insurance on their new home. This is a type of insurance policy protecting a homeowner when problems arise regarding their rights of ownership in their real estate. My response is the answer often lies in how the property owner generally manages risk, but considering the purchase of real estate is often the greatest investment they've made to date, it is a wise purchase.
In the past few years, I've been able to assist homeowners to access their owner's title insurance coverage to remedy problems with undischarged, prior owner mortgages still on their title. The coverage allowed sales of homes to proceed without delay while the problems were later fixed. Another client was unable to tear down a small home existing on their lot to build a bigger house because an easement ran through the width of their property which prevented rebuilding a larger home. That owner was paid over $45,000 for the loss in value he suffered. Finally, another client tried to build a new home on his vacant lot, only to be told by his bank's lawyer that a probate had once been done in the wrong procedure and the bank wouldn't continue with the loan until the correct procedure was corrected. I was able to do the correct probate and his owner's title coverage payed for the legal fees and costs.
Given the substantial value of the real estate investment and the low, one time, premium I believe Owner's Title Insurance Coverage is a good value.
When a debtor files a Massachusetts Chapter 7 bankruptcy case or Chapter 13 bankruptcy case their intention as to property must be stated. If the debtor does not wish to attempt to keep property an intention to surrender the property is stated.
If a debtor states an intention to surrender, the property does not automatically transfer to a secured creditor. To obtain title, a secured creditor must obtain relief from the bankruptcy stay of collection proceedings and then follow state law to obtain title to the present owner's interest in the property.
I advise all of my clients that ownership translates to liability for injuries sustained on the property. A bankruptcy filing will protect a debtor for such claims existing before the filing, but not those arising after the filing. Therefore, it is imperative to keep the property insured until legal title transfers.