Situation, Help Needed...

[kraken73]

I'm in Pennsylvania...

I filed 13 a few months ago, and due to back payments of the mortgage and such, the monthly payment is way too much for us to afford. We are now looking to just sell the house and move, and get the bankrupcty dismissed for now.

The problem is, our lawyer is advising us that we cannot even put the house up for sale until the 13 is dismissed, and that could be a couple months.

Then the foreclosure process starts again.
My main questions are:

Can't we advertise the house for sale and start getting things going with that, but not physically change hands before dismissal?
and
Once the foreclosure process completes, and goes to sherrifs sale (and not yet sold on sherrifs sale), if we sell the house then, we still get the proceeds from it if there are any?


Thanks

[Minnymouth]

At the present time you are under the "control" of the Trustee and the Federal Bankruptcy Court...... you CANNOT do anything without their permission..........

Did you consider doing a Chapter 7??? What is your attorneys suggestion on Chapter 7...... rather than dismissal of the 13??

Your attorney should have advised you and known that the payments were going to be too much for you to handle...... and advised you of such.....

Keep us posted.....

[lrprn]

At the present time you are under the "control" of the Trustee and the Federal Bankruptcy Court...... you CANNOT do anything without their permission..........

Did you consider doing a Chapter 7??? What is your attorneys suggestion on Chapter 7...... rather than dismissal of the 13??

Your attorney should have advised you and known that the payments were going to be too much for you to handle...... and advised you of such.....

Keep us posted.....

Minny is right. Ask your lawyer why he/she is not submitting a motion to request a reduction in payment due to inability to pay or (if your monthly disposable income is low enough) seeing if it's possible to convert to Ch 7. If you ended up with a monthly payment you really can't make, then there must be omissions or errors on your originally filed forms that can be corrected to get your payment down to what you can handle every month.

Dismissing a bankruptcy is the very last-ditch, no-other-choice thing to do after you've tried everything else first....and then tried everything else again!

[kraken73]

Reply...

Our lawyer did not advise us to convert to a chapter 7... I'd rather sell the house and gain some money out of it to start over again than to lose pretty much everything as you do with the chapter 7... As a family, we need 2 cars, and we have other items that might be non-exempt that we'd like to keep.

Originally the payments were not outrageous, and were semi-managable. But since so many months have gone by without paying the mortgage, it increased that monthly payment astronomically, and there's no way we can afford it. He never suggested trying to file a motion for reduction, but the original paperwork didnt even have us paying off what we owed on the back mortgage payments. This is kinda why I asked about selling the house and when we can do it.. He told me that there was no way to put the house up for sale without it being dismissed, and I thought that was a little wierd, needed a second opinion.....

What about foreclosure? When it's officially foreclosed on, is that when you loose your ability to profit from sale?

[HHM]

than to lose pretty much everything as you do with the chapter 7

That doesn't happen, surely your lawyer talked to you about exemptions and the possibility of filing chapter 7. The only reason I can see that your in a Chapter 13 is that you owe back mortgage (there is no way to cure back mortgage payments in a chapter 7, hence, your lawyer suggested a 13).

But first, what other debts do you have?

However, most people DON'T LOSE ANYTHING in a chapter 7. But, if you owe back mortgage payments, you would lose the house. But, your home equity is exempt, so if your home is worth more than you owe, and the equity is less than your state's home equity exemption, you get to keep that...but you would need to be the one to sell the house...if it goes to foreclosure auction, the bank is only obligated to accept the highest bid, which usually only amounts to the minimum bid (which is just enough to pay off the bank and all taxes).

Your attorney is right, you cannot sell the house without trustee apporval, the trustee is in charge of all your assets right now, so you can't really do anything "major" without getting approval.

[PI_Lvr]

If you have enough equity in the house to sell and pay the BK13 100%, you should look at that. I did it. As the others have said, if you don't have the equity, your lawyer should be filing to have your payments reduced so you can stay in the program, as it's meant to be used.
Good luck,

[kraken73]

Other debts...

I have a lot in credit card debt, and two car loans, but they (the car loans) are manageable, and within a year will be paid off anyway. The lawyer really hasn't mentioned much about Chapter 7... I don't really make a lot of money right now (I did before, thats partially how I got in this situation), so I wonder if I would not qualify because I make too much? I dont know.

There isn't enough equity in the house to pay the BK13 100%. Wish there was, that would be cool.

If the back payments of the mortgage are, say $20K, how would the lawyer get the payment for that reduced? The original plan they had for us only had the credit card companies getting 1%, which is well below what the trustee's want them to get. So how would the lawyer decrease that?

We do owe back payments on the mortgage, so if we filed Chapter 7 we would lose it... At this point we just want to sell the house before it gets foreclosed on, and then take the proceeds and "run".. we'll re-file either CH7 or CH13 after we move to take care of the credit card debt.

Well, at least thats the plan!

[SinkingFast]

If the back payments of the mortgage are, say $20K, how would the lawyer get the payment for that reduced? The original plan they had for us only had the credit card companies getting 1%, which is well below what the trustee's want them to get. So how would the lawyer decrease that?

We do owe back payments on the mortgage, so if we filed Chapter 7 we would lose it... At this point we just want to sell the house before it gets foreclosed on, and then take the proceeds and "run".. we'll re-file either CH7 or CH13 after we move to take care of the credit card debt.

Well, at least thats the plan!

Your plan is to sell and pay off debt. With $20K in arrears on your house, most likely when all is said and done, you won't have any proceeds anyway.

Could be your attny has not suggested Ch 7 because he/she thinks your goal is to remain in the house. If you can, why not just convert to Ch 7, get all the debt discharged, and be done with it.

As others have said, while in Ch 13 BK, you cannot just up and sell your house because you want to.

The moment you filed BK, you formed a BK Estate which the Trustee controls. The house is part of that BK Estate. If you want to sell the house, you're gonna have to get permission from the Trustee.

[HHM]

What are your chapter 13 plan payments right now? and how much disposable income do you really have?

Based on the numbers you threw out, I would ball-park that your minimum payment at about $400-$450. Those numbers would cover your arrears, trustee fee and attorney fee in a 60 month plan. If that payment is too much for you, your right, you really can't cut it. Did your attorney also put the regular mortgage payment into the plan, or are you still paying it directly to the bank?

The hard truth is, you have to look at your lifestyle relative to your income. If you got yourself $20,000 in arrears on a mortgage, you are simply in TOO MUCH house. I find it a tad ironic that you say the car loans are manageable, or that your house payment was "semi manageable" obviously it was NOT manageable, yet you are in a chapter 13, it is never ONE thing that puts you over the edge, your lifestyle is not manageable on the income you have. (but granted, since the cars will be paid off in a year, you don't need to do anything, I am just trying to address the mindset). Circumstances change, i.e. decreased income or what not, but you need to adjust.

With $20K in arrears and what not, how confident are you that the home has any "meaningful" equity. When you sell a house, the bank has to be made WHOLE, or deed can't be passed. Also, how long would the house have to be on the market?

In any event, if you can't continue making the Chapter 13 payment and the regular monthly mortgage, you are going to lose the house anyway...so unless you see yourself getting a raise or better paying job in the next 2 or 3 months, you will lose the house anyway.

[kraken73]

The minimum payment WAS about 500 bucks, which is do-able. Then apparently the lawyer calculated something incorrectly, and the arrears on the mortgage is more than originally expected. This is pushing the payment up to about 700-800 per month... The basic reason we're in trouble in the first place is I lost my 72k/year job, and am currently making 39k/year plus about 12k on a part-time job that i'm working 20-30 hours a week at.


From what the lawyer told us, is that only the interest on the actual principle payment of the arrears would be required at settlement if/when we sell the house. This makes more sense to me, since the payments themselves are about 2% principle and 98% interest, and basically they at least want their principle money back plus some fees, interest, etc.

I should be able to sell my house within a few weeks of placing it on the market, and its worth roughly $100K more than what I bought it for, but after re-fi's and such on the original mortgages, I owe about $240K according to the mortgage companies. I should be able to sell it for $280-$300k, so according to our real estate agent's numbers, we should be able to walk away with about 15K or so. Which is fine, we just want out of the house and we want to start fresh.

[SinkingFast]

From what the lawyer told us, is that only the interest on the actual principle payment of the arrears would be required at settlement if/when we sell the house. This makes more sense to me, since the payments themselves are about 2% principle and 98% interest, and basically they at least want their principle money back plus some fees, interest, etc.

I should be able to sell my house within a few weeks of placing it on the market, and its worth roughly $100K more than what I bought it for, but after re-fi's and such on the original mortgages, I owe about $240K according to the mortgage companies. I should be able to sell it for $280-$300k, so according to our real estate agent's numbers, we should be able to walk away with about 15K or so. Which is fine, we just want out of the house and we want to start fresh.

Been there done that with the job, Kraken. Completely understand what you're going thru. You don't wanna loose your home.

As to what your Lender may want to be paid,..... This is what happened to us.

Mortgage principal balance of $194K. Missed 6 payments at the time of closing. House went into Foreclosure. We got an offer a week before the Auction date. Lender cancelled the Auction and gave us 30 days to close the deal.

Our pay-off was in excess of $8K more than the principal balance. The Lender added in all interest, penalties, late fees, and legal costs.

Since you were in Foreclosure before you filed Ch 13, I'd guess that Legal Fees are gonna be part of your pay-off as well.

Just a suggestion here for you,......... Call your Lender and have them figure a pay-off for you. Or have your attny do it if the Lender won't work with you due to BK. In your situation, because the Loan has moved from regular service to the Foreclosure Dept, and is now with the BK Dept, it may take a week or so to get a pay-off figure.

In the mean time, have a couple of Realtors come and do a Competitive Market Analysis on your home. Tell you the asking price to sell quick, AS IS. Be sure to have the Realtors include all Seller's closing costs so you'll have good ball park numbers to work with.

Once you get the pay-off from your Lender, you'll know pretty close where you stand financially with regards to selling your house yourself. Then you'll know whether it's worth it to petition the Trustee to sell yourself or not.