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Roger
Roger, Attorney
Category: Bankruptcy Law
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Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by West
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This is related to bankruptcy and real estate. I live in Utah

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This is related to bankruptcy and real estate. I live in Utah am a year behind on a home whose loan is more than the value of the home. As of Sept 19 they can set a sale date no sooner than 30 days from that date.

The following have offered to help me keep my home even though a foreclosure sale date may be set as soon as a month from now. I must select one of these or consider other options you may recommend:
1) A bankruptcy law firm (Utah): They say filing Ch. 13 or 7 will stop the foreclosure process (is this true?), and the attorney will work out a new payment schedule. Estimated cost $2500 plus filing fees.
2) A modification review group: They assign a case manager to help me prepare a loan modification package at no charge. Then they refer me to an FTC approved law firm Butler & Associates (in New York) who I pay a retainer and they will interface with my lender. If I am denied a loan mod, they will try to negotiate better terms; if that is not successful, they will advise bankruptcy to try to keep the house. It is a 3-phase process, and I pay about $1000 as each phase is completed (excluding cost of bankruptcy if that becomes necessary.
3) A HUD approved non-profit agency (Utah): They are local and will meet with me once all documents are received. They will turn in the modification application to the lender. I don't know if they will negotiate with the lender should my app be denied.

I need to understand whether my filing bankruptcy now hurts or helps my chances to be approved for a loan modification. I have $30M in unsecured debt. I make $64M/year with current house payments of $1500/month. My single mortgage is for $217M at 8%. I heard a loan mod usually results in a house payment of 31% of gross.

What do you think is the best course of action?

Emily
Submitted: 11 months ago.
Category: Bankruptcy Law
Expert:  Roger replied 11 months ago.

Roger : Hi - my name is XXXXX XXXXX I'm a Bankruptcy litigation attorney. Thanks for your question. I'll be glad to assist.
Roger : Generally filing a chapter 7 bankruptcy does not help a loan modification at all. In fact, doing this usually ends up with the creditor withdrawing because the automatic stay stops a creditor's right to collect on a debt.
Roger : You can try to continue and get the loan modification done through a reaffirmation agreement and have the bankruptcy court approve it, but the trustee can object.
Roger : If a chapter 13 were filed, you can actually do a loan modification of sorts through your plan. In a chapter 13, you're allowed to propose a plan to repay your debts over time, extend the repayment time period, which reduces the monthly obligation.
Roger : That's likely the best option - - also, the filing of chapter 13 stops the foreclosure proceedings.
Roger : So, it will buy you some time.
Roger : If a chapter 7 were filed, it would be a temporary relief as the foreclosure would be halted, but the lender would be allowed to lift the automatic stay and proceed with the foreclosure.
Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 26414
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by West
Roger and 3 other Bankruptcy Law Specialists are ready to help you
Expert:  Roger replied 11 months ago.
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Customer: replied 11 months ago.

Very valuable information, thank you! I received notice of sale date today to occur oct 19 at auction.


 


I was told I could on my own do only a petition for bankruptcy (just to obtain a case number XXXXX not actually file) and the mortgage lender would have to postpone the foreclosure process during which time I could apply for one of their loan mod packages. They said once the loan mod review process starts they are not allowed to foreclosure on the house. Does this sound right?


 


What you are saying is slightly different: Actually file for ch. 13 then work with the lender to restructure payments as part of that process which is more like an inhouse loan modification, is that correct? This makes sense to me because it reduces monthly payment obligations to my unsecured debtors which is considerable about 30M. One bankruptcy firm said they could include working with the lender and another one said they would not try to negotiate with them.


 


Loan mod only: I am about to retain services of an out of state law firm, at this point working with an agency that gives them referrals and they seem quite knowledgeable. They sent me documents which claim they will negotiate a modified mortage payment, repayment plan, forbearance or reduction of the principal of my loan. cost is over $3000 but in phases only as services are actually rendered and I may cancel at any time. I have not seen negative reviews for them but hope I am making the right decision. If I follow your guidelines, I may not need them.


 


Any advice?


 


 

Expert:  Roger replied 11 months ago.
You would have to file bankruptcy in order to stop the foreclosure; however, it is possible to file and then dismiss your petition -- but the creditors and trustee have to approve it if you file a chapter 7; a chapter 13 is generally easy to dismiss. That may have been what you heard. But, you'd have to file in order to have a case opened and invoke the automatic stay.

The chapter 13 filing gives you the right to propose a plan and make your mortgage payments through the bankruptcy plan. You generally an extend the terms of the loan up to 30 years to extend payments, thereby reducing the monthly payment amount.

Chapter 13 bankruptcy is a much better option that a loan modification because it is the only thing that will work - - a loan modification may or may not.
Expert:  Roger replied 11 months ago.
Please let me know if you have any additional questions.
Customer: replied 11 months ago.

Roger, thank you for your response! I have concerns re information I received yesterday.


 


A local attorney said she could file a CH 13, eliminate all my unsecured debt which would be great. For my house, however, she said I would resume regular payments plus pay back the amount in arrears (23,000) spread out over 60 months. This brings my house payments to 2000 and my take home is 3000. She did not mention negotiating on my behalf with the lender. She said then I could pursue a loan mod on my own over the next year or so.


 


What you said sounds a lot better. Maybe I should look for another lawyer who can negotiate better mortgage payments as you suggest?


 


Also, do you think we have a chance at keeping my husband's motorcycle? We are making payments but could pay it off with our last tax refund. I am worried they consider it a luxury, but the fact is we have one working car which I drive to work and my husbands work truck gets 7 miles to the gallon. He needs to bike for economical transportation for work or to apply for work. That brings up another point, he has been too sick to work, but if he can get part time work after ch 13, can we keep his pay? Or if my pay goes up or down does that change our payment arrangements approved under ch 13?


 


I'd appreciate a prompt reply. I just received notice we have to be prepared to vacate our premises by Oct 20, one day after the house goes up for auction, asking price $20,000.


 


 


 

Expert:  Roger replied 11 months ago.

Hi -

 

You should consult the attorney again about what exactly has to be paid during the 5 year term. It's likely that there was just a miscommunication. You're not expected to pay off the entire mortgage in 5 years. Instead, you pay the arrearage during that time and then pay the mortgage as agreed between you and the lender - - usually this can include an extension of the term up to a 30, 40 year note.

 

If you file a chapter 13 and can prove that you can afford to make the motorcycle payments, you should be able to keep it.

 

Please let me know if you need anything further. Thanks.

Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 26414
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by West
Roger and 3 other Bankruptcy Law Specialists are ready to help you

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