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Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2863
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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My husband & I are in a Chapter 13 BK that has been confirmed.

Resolved Question:

My husband & I are in a Chapter 13 BK that has been confirmed. Now we are trying to do a loan modification. If I decide to not make a mtg pmt until the loan mod is done, (they just tack on the arrears in the final mod I guess anyway). how will it afferct my BK.? My Mtg said they won't start a foreclosure on because we are in a BK. My attorney doesn't seem to really want to tell me what I can do - is it because of legalities of some sort?
Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 6 years ago.

Hi billyboy,

Are the mortgage payments included in the Chapter 13 plan, or are the mortgage payments being made separately from the plan?

 

Customer: replied 6 years ago.

We are not sending them to our trustee, just mailing them to our mtg. co.

Our payments to our trustee do not include anything towards our mtg, accept to pay an small escrow shortage.

Customer: replied 6 years ago.
I have a bigger question...How would foreclosure work with our chapter 13 BK and moving from Nevada, back to home to Minnesota. It is because of my husbands health and being near his VA doctors and the need of family...
Expert:  Terry L. replied 6 years ago.
Hi and thank you for your question.
Since you are in a confirmed chapter 13, you should bring a motion for approval of the loan modification. If you miss payments, the lender may bring a motion to modify the automatic stay protection the bankruptcy offers you. This allows the lender to work with you directly, but also allows the lender to foreclose if you are behind on the mortgage. You may have to take a leap of faith if you want to skip payments (even if told to by the lender) for if the stay is modified, and your loan modification is not approved, then you will need to cure the default to avoid foreclosure. You should put the mortgage payment aside and not spend it, so if you need to cure if the loan modification is not approved, you'll be able to. If you want to walk away from the house, you can bring a motion to modify your plan based on your change of situation (the move) to adjust the case based on your new expenses (and income?) If you want to let them foreclose, you can, and have your modified plan reflect that. Otherwise, you may even be able to convert your case to chapter 7, surrendering the home too, and discharging the balance.

As always, talk to your bankruptcy attorney to review these matters, so that they can comply with all local rules and case law. Your case will still be handled where you filed, regardless of where you move to, unless you file a motion to change venue. Good luck to you.
Customer: replied 6 years ago.

During the foreclosure, where we don't make the mtg. payments, that money will be used to move. (The foreclosure process takes up to a year?) At what point, does our BK plan have to be modifed? Is it only after we are relocated and have our new expenses?

 

Expert:  Terry L. replied 6 years ago.
You don't have to modify the plan, but if you want to prevent a deficiency balance to be collected on, you should bring a motion to modify the plan before the foreclosure is finished. if you want the modified plan to reflect your new monthly budget, you can show the court that too, but do it before the foreclosure is final.
Customer: replied 6 years ago.
What is a deficiency balance?
Expert:  Terry L. replied 6 years ago.
Any balance left after they sell the home at foreclosure sale - if they don't get enough to pay off the loan and costs
Customer: replied 6 years ago.
I forgot to tell you that our mtg is underwater - we built in 2005 - it is about 100,000 under value right now. Then there wouldn't be any money for the court to use to pay towards any debt in the BK , how would that effect our plan? If we foreclose what do we have to pay and for what?
Expert:  Terry L. replied 6 years ago.
That may mean a conversion is an option, depending on other assets and your monthly income and expenses. Talk to your lawyer to see if a conversion is an option.
Otherwise, if you don't bring a modified plan, the lender could come after you for a deficiency, outside the bankruptcy, unless your modified plan specifically disallows it.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2863
Experience: Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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