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Have you already filed for a Chapter 13?
Are either of you wage earners?
From what you are telling me, your income properties will be considered the same as any other business. You would be able to keep the properties but of course, part of the "plan" would be to pay the mortgages on those properties. The payments would not necessarily be the same of course. They would be decided upon the approval of your Chapter 13 plan when you and your attorney submit a plan to the Trustee that is actually approved.
However, it is possible that the debt you have, versus your ability to pay and so forth will force you into a Chapter 7. It is something you need to carefully consider with your attorney when you meet with him or her.
We make just over the amount that would qualify us for a chapter 7, using the means test. Since we had 20% down (using my retirement), we are not that upside down on these places. I don't want to kiss my retirement goodbye, but we just can't afford the current situation. It seems that a chapter 13 may be worth pursuing if the new mortgages could be somewhat less than their value. Is that at all likely?
Otherwise, we haven't gained much and will face problems again if home values decline and we have to lower rent again.
Hello again, Thank you so much for the Accept! I so appreciate it.
How "amicable" are your lenders? Are they at all willing to work with you?
I worked with one lender on my rental property to get a "deed" for lease - that didn't work out - My current renters didn't want to participate and lease from the bank (they can't even pay me right now) so things moved quickly to foreclosure notices and notice of sale in January - I am now coming up on 120 days late; They must be under pressure to speed up foreclosures or something.
The other rental property is consistently 30 days late - it is difficult to get a month ahead now that our savings is gone. That lender is looking into a new program to do a mortgage modification but it is taking longer than they estimated - i think they won't like seeing the other (delinquint) property on my credit.
Is it plausible to get a mortgage payment doing a chapter 13 that would be less than the houses might be appraised for - like fair market rental price as a payment? The banks don't seem to want to do this voluntarily.
What might happen in the case I can't make full payment because of loss of rental income? Would I just need to notify the court of my situation?
Without looking at the mortgages and so on, I don't know exactly what could happen. But, usually, the Ch.13 plan requires that you pay the regular mortgage payments, plus any back amounts. The plan is usually 3 to 5 years. This only applies to certain secured debts like mortgages. Once the bankruptcy court gets involved, the banks are often more "flexible" because they know they are almost guaranteed to get their money.
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