Legal Question in Bankruptcy in Maryland

Mortgage Payment while Property is Listed for Sale

When the U.S. Trustee decides that a property should be sold after filing for bankruptcy, who makes the mortgage payment? If the property is legally not mine, and can be sold out from under me, can I set up a bank escrow account into which I pay the monthly mortgage commitment? Then if the property does not sell for what the U.S. Trustee claims, the monies in the account can be promptly paid to the mortage company.


Asked on 10/03/98, 11:43 am

1 Answer from Attorneys
Daniel Press Chung & Press, P.C.

Re: Mortgage Payment pending trustee's sale

The case trustee (a private person, usually a lawyer, appointed on a case by case basis), not the U.S. Trustee (who is an employee of the US Justice Dept.) decides to sell property.

The mortgage payment is not made because the automatic stay protects the property while the sale is pending. After sale, the mortgage and any other liens are paid from the proceeds (less any avoidable liens), then your exemption, if any, is paid to you, then the trustee keeps the rest for payment to your creditors.

You can certainly do that with the mortgage payments. If the property does not sell for enough to pay off the mortgage, the sale should not go forward. But a better option may be to convert to a Chapter 13.

If there is any risk that your property might be taken by the trustee, you should definitely have a lawyer represent you in your bankruptcy. I preactice bankruptcy law in VA, DC, and MD, so feel free to contact me.

Daniel Press

Chung & Press, P.C.

6723 Whittier Ave., Suite 302


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Answered on 12/23/98, 4:55 pm


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