A Bankruptcy can save your home after the auction in Vermont

Save your home from Foreclosure with a Bankruptcy in Vermont

Case Law
In re: ALLEN JOHN BARTLETT, DAWN MARIE BARTLETT,
Debtors. UNITED STATES OF AMERICA, Plaintiff, v.
ALLEN JOHN BARTLETT and DAWN MARIE BARTLETT, Defendants.

Chapter 13, Case # 05-10340, Adversary Proceeding # 06-1021
UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF VERMONT
353 B.R. 398; 2006 Bankr. LEXIS 2917
November 1, 2006, Decided
November 2, 2006, Filed

Facts: Mortgagor A first mortgaged a property in favor of the Unites States of America. Later, A executed a second mortgage in favor of bank X. For failure to pay the obligation, bank X filed a complaint for strict foreclosure on the second mortgage. The Court ruled against A further setting a final redemption date on April 12, 2004. A lost his interest in the property after the right of redemption expired. Meanwhile, on March 30, 2004 the United States filed a complaint for foreclosure of which a judgment by default was entered in its favor and against the mortgagor. The government then sought foreclosure in the federal district court, which issued an order reinstating debtors' right of redemption. The United States of America, acting on behalf of the Rural Housing Service, filed a complaint presenting two counts: the first seeks revocation of the August 15, 2005 confirmation order entered in the bankruptcy case of mortgagors and the second seeks a declaration that the subject real property is not property of their bankruptcy estate. The parties have cross-moved for summary judgment on the second count of the complaint. For the reasons set forth below, the Court finds that the mortgagors had an interest in the subject property at the time they filed their bankruptcy petition and therefore it is property of the estate.

Issue: Whether the mortgagor had any interest in the residential real property as of the date it filed their bankruptcy petition, and hence whether the Property was property of the bankruptcy estate.

Ruling/Lesson Learned: Yes. When the mortgagor filed the petition for relief under Chapter 13, an estate was created that included "all legal or equitable interests" that they held at that time. Since a right of redemption is an interest of the debtor in property forming part of the estate, that interest became part of the bankruptcy estate on the petition date.

Written by Kevin Levonas and Jerry L.