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Ch7 & Foreclosure - List of Options?

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Junior Member
What is the name of your state? ILLINOIS

  1. Filed Chapter 13 in December 2004 for $39K in Debt. Mortgage foreclosure had just started (was served).
  2. During Ch13 - fell behind in both trustee and mortgage payments.
  3. Converted to Chapter 7 in June 2006. New debts bring the total BK value (debt) up to $67K (IRS stuff when I was self-employed).
  4. I owe $252K to the bank for my Home. I believe I can get $350K for it if it were in immaculate condition (paint, doors, windows, central AC, new carpet, floors done, painting inside and out, new sidewalks), but it isn't, so I subtracted quotes and estimates on those (which I took the time to obtain) and I've come up with a price of $295K, which is $30K less than what my real estate agent friend said I could probably get for it if I waited 6 months.
My Future as I know It
  1. I'm leaving Illinois and moving to North Carolina. This is non-negotiable, and has to do more with my family and our recent decisions about where to live. We already have a lease signed on a brand new house which we'll rent out for several years until our kids are through school. Then it's on to Life 2.0 for me and the misses.
  2. I'm going to want the best situation possible regarding the house in foreclosure. I'm doing (very) minor repairs, and some lawn care, a thorough cleaning, etc. Nothing more, nothing over $500 in total improvements. My realtor friend said CURB appeal is key, so that's where I spent most of my efforts.
The Short List of Questions
  1. Foreclosure: Already started but stayed due to 13 and now 7 proceedings. After 341 meeting (this Thursday), trustee may let them continue process. Or may opt to hold property and sell themselves (see next question).
  2. Deed in Lieu: This is where it gets rough. If the Trustee passes on the property (they think it's worth $280K [based on my 12/04 self-assessment]), they may not try to sell and then it becomes the mortgage company's headache via foreclosure. If I opt for a DILOF, do they HAVE to accept that? They can probably get $300K on the market immediately, or $280 at an auction. Would they accept? I owe them $252. Is the DILOF better than a Foreclosure on my already destroyed credit reports?
  3. Forbearance: Not a great alternative now, because in theory, I'm already moving to another state in 1 month. If they and I go into a FA, doesn't this require me to pay 'rent' (same as mortgage payment) during the (assumedly) 120-180 days to sell the house on my own? If I cannot pay, or if I fall behind, do they pick up foreclosure again and just ignore my other requests thereafter? I could potentially sell it this way (and pay them out, and avoid a foreclosure), but I don't think I can pay that rent. This really sucks as an option.
  4. Auction by Trustee: I'm thinking, looks more and more juicy. Why? The lack of requirement to do ANYTHING on my part. I can leave the house early (in one month as I've stated), not pay rent, and the sale it up to the trustee. In fact, I avoid a FC on my record as well! It's all wonderful. I even get the cash back from the state exemption [see next question]. Sounds like this is my BEST option.
  5. Me Selling During Foreclosure: If I let it go into foreclosure, and let's say, I don't expect FC to complete until November, what if I come up with a buyer and contract before the sale? How much before the sale must I do this? Must they accept the sale contract, or can I sue in separate court (outside of the assumedly now-discharged Ch 7 bankruptcy [it's November, probably a discharge in Sept])? I don't think they'd have to accept, but this would preclude them from possibly losing money and avoid me having a foreclosure on my trashed records.
And now, the final question:

My attorney doesn't know this one. Does the old law for state exemptions apply ($7.5K for each spouse in Illinois) for bankruptcies (Ch7), or does the new one (double that) apply in a case filed under old law, and converted during the new laws?

There was no interruption in the case, although we narrowly missed getting in a motion to vacate dismissal based on my nonpayment to the trustee. Our motion to vacate dismissal was approved and the court allowed us to convert.

Thanks In Advance!What is the name of your state?

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