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cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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My lawyer said he could either argue for a seven now. Or he

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My lawyer said he could either argue for a seven now. Or he said he could file chapter 13 and then convert it to chapter 7 later.

The second option would be ok except does this mean i would have to pay the $2250 twice?
Submitted: 3 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 3 years ago.
Hi JACustomer,
1) Is there an anticipation that your financial situation - particularly your income - will substantially change in the near future?
2) Is the $2250 the attorney fee?
Customer: replied 3 years ago.
No I do not expect my income to change.

However, I own a house (50K under water)which and am current on the mortgage.

I also own a one bedroom condo where the rate on my mortgage recently reset. My new payment is $1850 plus a $500 condo fee which is not tenable on a one bedroom. I have not paid the mortgage in 7 months. I owe about $18K past due. My total balance is $277,000. The condo is worth roughly $110,000. I also have about $30,000 in credit card debt.

The $2250 is the fee I was quoted to do the Chapter 13.

The lawyer told me he can arrange so I can keep both the house and the condo but at this point I dont think I want to keep the condo.

Expert:  cfortunato replied 3 years ago.

I know you didn't ask about this, but if you are not going to keep the condo, and if you stop paying the condo fees, you will remain responsible for the condo fees that accrue after a Bankruptcy is filed, and before the condo forecloses.

In any event, if you cannot file a Chapter 7 now, you will not be able to convert to a Chapter 7 later if your financial situation does not change, and you will be charged something- but probably less than $2250 - to attempt to convert.

 

I think this is what you wanted to know. If not, please let me know.
Thank you!

Customer: replied 3 years ago.
Would the foreclosure or a lwsuit related to the foreclosure from Chase for their loss count as a change?

How does that work if I file now would I then be precluded from filing when the bank sues me?

I also need to know if the IRS will count the loss as income to me?

Expert:  cfortunato replied 3 years ago.

1) What is the reason that you cannot file a Chapter 7?

2) Is the reason that your income is too high for a Chapter 7?

3) Is the reason that you are trying to hang onto the condo?

4) Is the condo underwater?

 

Customer: replied 3 years ago.
1) I believe it is because my income is to high - but the lawyer I spoke to said he could argue for it now...

2) I would like to hang on to the condo if the bank modifies the terms. But as it is now I would not want to pay the current payment for another 25 years.

3) I am $150K underwater on the condo.
Expert:  cfortunato replied 3 years ago.
Your attorney can argue for you now, or he can do it later - after you file a Chapter 13, and then try to convert it to a Chapter 7. The argument will be the same, as the Means Test is the same for either event.
If you convert, it will probably cost you extra, as new papers have to be filed. You have the right to find out from your attorney - and should ask - how much he will charge you to try to convert to a Chapter 7.

I think this is what you wanted to know. If not, please let me know.
Thank you!
Customer: replied 3 years ago.
Yes except the question is - if I file now and then get sued related to foreclosure in four months will I give up my chance of being protected by the bankruptcy from that lawsuit?
Expert:  cfortunato replied 3 years ago.

Is there more than on mortgage on the condo?

If yes, what is the balance of each mortgage?

Customer: replied 3 years ago.
No just one mortgage.

I own $277K. It is worth roughly $120K
Expert:  cfortunato replied 3 years ago.

A Bankruptcy - either a Chapter 7 or a Chapter 13 - can delay (for up to around 6 months), but cannot stop a foreclosure if you are behind on the mortgage payments. With a Chapter 13 you will be able to pay the $18K that is past due over the life of the Chapter 13 - up to 5 years. But you also have to pay the regular mortgage payment.

If you cannot pay the regular mortgage payment in addition to the monthly arrears payment, the mortgage company can foreclose even if you file a Bankruptcy.

Customer: replied 3 years ago.
OK but just to recap.

My concern is the lawsuit that will follow a foreclosure, and the tax liability as well.

If I file now, then let it go to foreclosure, will I be limiting any protection I may have from the follow on lawsuit for the banks loss between the loan amount outstanding and what they recover at auction?

Expert:  cfortunato replied 3 years ago.

Are you liable for condo membership association fees or dues, in addition to your mortgage?

Customer: replied 3 years ago.
Yes the fees are 480 a month. I currently owe the association 2500.

Does that somehow change the answer?
Expert:  cfortunato replied 3 years ago.

If you file a Chapter 13 and complete the plan (continue to make the payments for up to 5 years), or get a discharge in a Chapter 7, you will not be liable for any deficiency judgment for the balance of the mortgage after the condo forecloses. You will also not be responsible for any taxes on the property or any income tax based on 1099-C debt forgiveness.

However, you will remain responsible for any association fees that accrue after the Bankruptcy is filed - whether it is a Chapter 13 or a conversion from a Chapter 13 to Chapter 7.

cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience: Bankruptcy professor.
cfortunato and 2 other Bankruptcy Law Specialists are ready to help you

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