J Thomas Black
Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization

For consumers, chapter 13 can be a very useful chapter of the U.S. Bankruptcy Code. Recently, we had a client that owned property in another state. The house was "underwater," i.e. there was more owed to the mortgage company than it was worth.

The house was also in disrepair, and our client couldn't even sell it through a short sale. They tried everything to unload the property, no takers. Not only that, but the mortgage company refused to foreclose on the property. They apparently didn't want the house either. It's the old "zombie" house problem.

We filed a chapter 13 bankruptcy plan for our client, and proposed in the plan that the property "vest" in or become owned by the mortgage company that had a lien on the property, upon confirmation of the plan. The mortgage company did not object, and the plan was confirmed.

Next we will obtain a certified copy of the bankruptcy court order and have the client record it in the county records of the county and state where the property is located. 11 U.S.C. Section 1322(b)(9).

The court order will act as a "deed" and put the property in the mortgage company's name. So (hopefully) the mortgage company should start receiving the various tax bills, maintenance assessments, and whatever other bills are associated with the property.

Although this vesting provision hasn't been explicitly approved by all courts yet, it is specifically provided for by chapter 13, so we believe we are on firm legal ground. It also will hopefully keep our client from being responsible as an owner of the property if someone were to go on the property and be harmed, for example.

If you have serious debt problems, chapter 13 can really help, depending upon your circumstances. If you live in the Houston, Texas area or surrounding counties, call our office anytime at 713-772-8037, for an appointment, or just if you want more information.

Have you had an experience with "zombie" property that you could not get rid of? What happened? Please post any questions or comments below.

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