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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 34372
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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can my mortgage company (2nd td HELOC) twice the value of the

Customer Question

can my mortgage company (2nd td HELOC) twice the value of the property be included in the payment plan. (if they agree)
Submitted: 2 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 2 years ago.
Yes. And, you can ask the court to discharge the loan at the end of the plan, if your first td balance is greater than the value of the real estate.

Hope this helps.


And, if you need to contact me again, please put my user id on the title line of your question (“ToCustomerrdquo;), and the system will send me an alert. Thanks!

socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 34372
Experience: Attorney and Real Estate Broker -- Retired (mostly)
socrateaser and 3 other Bankruptcy Law Specialists are ready to help you
Customer: replied 2 years ago.
Now we are at the pivotal issue for me. i am in the middle of a short sale in which the lender had agreed to accept $72,000 from the buyer. This was halted when i filed chapter 7 ( the negotiator failed to to request a trustee sale postponement). My file was closed as an active bankruptcy. However they have agreed to complete the short sale under chapter 13 in which they will pay the 2nd TD per Federal Banking short sale guidelines. Question. How long can I expect the chapter 13 to protect me until the short sale is complete. The process typically takes 3 to 6 months to close escrow with the clearance from the lender.
Expert:  socrateaser replied 2 years ago.
Now we are at the pivotal issue for me. i am in the middle of a short sale in which the lender had agreed to accept $72,000 from the buyer. This was halted when i filed chapter 7 ( the negotiator failed to request a trustee sale postponement).

A: Actually, no. A Chapter 7 stays any attempts to collect a debt against you. The lender cannot continue to negotiate without obtaining relief from the bankruptcy stay, or your executing a reaffirmation agreement.

My file was closed as an active bankruptcy. However they have agreed to complete the short sale under chapter 13 in which they will pay the 2nd TD per Federal Banking short sale guidelines. Question. How long can I expect the chapter 13 to protect me until the short sale is complete. The process typically takes 3 to 6 months to close escrow with the clearance from the lender.

A: If you have a 60 month plan, and your plan includes the 2nd TD, then you would be protected for 60 months, assuming that the lender does not come back to court with a change in circumstances (I won't speculate as to what that would be) as grounds for obtaining relief from the automatic stay.

That said, I'm wondering why you care about a short sale (or a Chapter 13), since your Chapter 7 will relieve you of any further obligation for the loan, and whether foreclosure or short sale, the outcome will be identical with respect to your credit report, your living arrangements and your financial circumstances and liability.

In the end, you will have to vacate the property, your credit score will be approximately the same, due to the bankruptcy, and you will have no financial liability for the unpaid loan balances. So, why not just let the Chapter 7 go forward, stop negotiating with the bank and move on with your life.

Seems a pretty obvious answer to me.


And, if you need to contact me again, please put my user id on the title line of your question (“ToCustomerrdquo;), and the system will send me an alert. Thanks!

Customer: replied 2 years ago.
discharge the loan at the end of the plan? meaning that i would make payments on the second for ie 5 year plan and then it would be discharged. this is a variable rate loan so will court set payment based on ability to pay?
Expert:  socrateaser replied 2 years ago.
There are several possibilities concerning a 2nd lien on a debtor's principal residence, in a Chapter 13:

  1. Debtor can divide the net present value of the original loan by 60 and pay it off during the plan. Example: 2nd has loan with balance of $100,000, 12 years at 6%, and $1,000 per month payment. NPV = $102,474.74; divided by 60 = $1,707.91 per month.
  2. Debtor can maintain the current loan payments, and catch up on the arrears over 60 months at zero interest on arrears. Example: loan has $1,000 monthly payment, arrears of $10,000; total payment would be $1,166.67 per month.
  3. If 1st lien loan balance equals or exceeds property fair market value, then debtor can ask the court to strip/unsecure the 2nd from the property, debtor can make payments on the 2nd as if it were any other unsecured debt based on the plan, and at the end of the 60 months any remaining balance on 2nd is discharged.

Hope this helps.


And, if you need to contact me again, please put my user id on the title line of your question (“ToCustomerrdquo;), and the system will send me an alert. Thanks!

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