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cortrightlaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 513
Experience:  Attorney practicing Bankruptcy Law including Chapter 7, Chapter 11, Chapter 12, and Chapter 13.
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In May 2012 my husband and I signed an agreement with our private

Resolved Question:

In May 2012 my husband and I signed an agreement with our private mortgage lender to reduce our monthly payment from principal and interest, to interest only at a lower interest rate for the next 5 years. As part of that agreement it stipulated that we must be current on our monthly payment and property taxes. Part of that agreement included a clause that said we waived the right under bankruptcy law in the event that we default on that agreement. Subsequently in July of 2012 we made the decision to file personal bankruptcy chapter 7. All our unsecured debts have been cleared and the case was closed in Sept. 2012. We are currently 1 month behind in our mortgage and our current property tax bill remains unpaid at this time due to continued hardship. We received a letter from our private mortgage lender a few days ago and stated that we are in default as a result of this. How can we protect our home from foreclosure? In the event that our mortgage lender is unwilling to work with us moving forward what are our options under bankruptcy law?
Submitted: 4 years ago.
Category: Bankruptcy Law
Expert:  cortrightlaw replied 4 years ago.

cortrightlaw : The lender is still required to file you stated foreclosure laws and practice. The best thing to do is to attempt to get current immediately and cure the default. Most likely the lender will then not proceed with foreclosure as if you are current they would not have any grounds to proceed. As to bankruptcy I have never seen such a clause but I am sure that the bankruptcy court would consider it invalid as they have no right to keep you from bankruptcy protection. At this point your only available bankruptcy option would be a chapter 13 to address the past due mortgage.
Customer: replied 4 years ago.
Thank you for your response. The market value of the house $100,000 less than the 1st mortgage. Can a bankruptcy proceeding force the lender to reduce the 1st mortgage to the value of the house? We purchased the home for $895,000. The 1st mortgage is $649,000 and the market value of the house is $520,000.
Expert:  cortrightlaw replied 4 years ago.
No the first mortgage cannot be changed through a chapter 13 or 7, only a second mortgage can be stripped.
Customer: replied 4 years ago.
Mr. Cortright are you still there?
Expert:  cortrightlaw replied 4 years ago.
Yes I am
Customer: replied 4 years ago.
Can the principal value of the house be reduced from $649,000 to $520,000 through bankruptcy? (I think you may have misunderstood my question as we have never had a 2nd mortgage.)
Expert:  cortrightlaw replied 4 years ago.
No the principal on the first can not be reduced to the current value on your personal residence. Only on I come properties and then only on a chapter 11.
Customer: replied 4 years ago.
Last question. Should we file chapter 13 or chapter 11 and what is the difference?
Expert:  cortrightlaw replied 4 years ago.
It would be chapter 13, chapter 11 is for business. You should go talk with an attorney to see if you qualify for chapter 13, you have to show that you can afford your mortgage and pay back the past due amount.
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