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Will I be able to keep a payment received from the Independent Foreclosure Review while in Chapter 13 Bankruptcy?

Novi, MI |

I am one year into a 36 month Chapter 13 bk. I received notice in the mail that I am eligible to receive a payment as the result of an agreement between my mortgage servicer and federal banking regulators. No amount was given yet for the payment I will receive. Will I be able to keep this payment or do I have to turn in over to the Trustee? Thank you.

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Attorney answers 4

Posted

You probably will have to turn this check over to the Trustee unless you have an exemption you can claim to protect it. Hope this perspective helps!

Posted

Don't hold your breath.

Posted

According to the U.S. Trustee, each trustee should consider all relevant circumstances when deciding whether to seek turnover of the payments in a particular case. Factors to consider include:
• The payment amount and any interest of a non-debtor spouse or other person in the payment;
• The cost of recovering and administering the payment, including litigation with a borrower in bankruptcy who may seek a judicial determination regarding whether the funds are subject to administration;
• The extent to which recovering the payment will enable creditors to receive a meaningful distribution; and
• The applicability of state and federal exemptions.
The US Trustee has suggested it will not seek to compel a trustee to recover payments that the trustee, in the exercise of discretion, decides not to recover.

Posted

You should advise your attorney and amend your schedules to exempt any potential recovery.

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