Can The City Charge Me For Code Violations If I Surrendered My Property in Chapter 7 Bankruptcy?

29 Jan Can The City Charge Me For Code Violations If I Surrendered My Property in Chapter 7 Bankruptcy?

Even if you “surrender” your property in a Chapter 7 bankruptcy, the city or municipality can make you comply with code regulations.

When you file a Chapter 7 bankruptcy, you have three choices on how to handle secured debt, such as a mortgage or property taxes.
*You can choose to redeem the property – which is to pay the creditor the full value of the property
*You can choose to reaffirm the debt – which is to continue to pay the regular monthly payments (but you usually have to be current when you file your bankruptcy).
*You can surrender the property. This is where you inform the secured creditor (the mortgage or tax department) that you are giving up your interest in the property to them.

The problem that often arises when you choose the “surrender” option is that you still own the property until the secured creditor takes an affirmative action to gain title to the property – like a foreclosure or deed-in-lieu-of-foreclosure. In some cases, the secured creditor never takes the needed action, and the property remains yours. Until the secured creditor legally holds title to the property, you remain liable for compliance with all code regulations. This means that you need to keep up the lawn and yard, and keep the buildings in good repair. If you are cited for a code violation, you can be fined or even put in jail. Also, any fines, or expenses connected with the property after you file the Chapter 7, are not discharged in your bankruptcy.

It is important to let your bankruptcy lawyer know about any possible code violation issues as soon as you are aware of them.

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Peter Orville is a bankruptcy lawyer in Binghamton, located in the Southern Tier of New York. He is a member and New York co-chair of the National Association of Consumer Bankruptcy Attorneys.
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