Chapter 7 bankruptcy debtors who surrender their property during bankruptcy may still be bound by the code and regulations enforced by their city or municipality until the secured creditor takes action to regain title of the property. Until the creditor legally holds the title to the property the homeowner may still liable for complying with code and could be subject to fines if found to be in violation. Below are a few things you need to do while you wait for the creditor to take legal hold of the property:
- Find out about the code in your city. What are the minimum standards for complying with the code and regulations of you city.
- Make sure the property is up to code. If there our code violations you need to find cheap or free ways to correct those code violations.
- Keep the yard in order. Cut the grass and board up any broken windows.
- Keep the building itself well maintained, at least to the minimum standards.
It's also important that debtor realize that they are not required to surrender their property in bankruptcy. Below are other options for handling property in bankruptcy:
- A debtor in bankruptcy can choose to pay a creditor the full value of the property. This may be smart if the property has very little monetary value, has some real value to the debtor (it's their primary home or the home of a family member) and the debtor has the cash available.
- A debtor can reaffirm the debt on the property during bankruptcy. Basically during a reaffirmation, the debtor agrees to continue paying their mortgage as agreed.
However, if a debtor chooses to surrender their property during bankruptcy, failure to comply with city codes and regulations could result in steep fines and even jail time. Remember, any fines accrued after filing Chapter 7 bankruptcy will not be discharged in your bankruptcy case.