I am currently in a chapter 13. Filed in 9-05 and confirmed in 12-05. First payment 10-05. We have a plan base of 31,995. This consists of all charge cards and a second mortgage loan. We have paid in to the plan so far 13.995.34 with 10,714.76 of that being paid to actual creditors. We have a 36 month plan. My question is this. We did NOT include our 1st mortgage or our vehicles. We continue to pay those on time. However, we may have to move out of state due to husband's job. Are we allowed to sell our house since the 2nd mortgage is included in the BK? Also, even if we were allowed to sell the house, what happens with the money left over from the sale and the loan payoff (if any). OR...what happens if we CANT sell it and we need to move? Do we just stop paying the mortgage payment or do we include it in the bk or can that be done? I dont know what the protocol is on this. Any help would be appreciated.
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You need to inform the trustee that you are intending to sell the house and get his consent. In order to transfer clean title, you will need to pay off both the first and 2nd mortgage. Since you are in a chapter 13, it doesn't really matter that you "included" the 2nd in your chapter 13...a mortgage note holder ALWAYS has the right to enforce their lien. When you filed BK, were any mortgage arrears included in the plan (either from the 1st or 2nd?)
As for any profit on the deal that you might get...generally you can keep an amount up to your state's home equity exemption. If the profit exceeds that amount, you can usually keep it if you reasonably intend to use it for the purchase of a new home. If there is enough profit, and since you filed under the old law and have been in your plan for more than 1 year, you can PAY OFF your chapter 13 and receive your discharge.
If you cannot sell it and decide to let the house go, the house will go into foreclosure. The 1st mortgage holder will file a motion in the BK court to lift the protection of the automatic stay and proceed with foreclosure. -
No mortgage or 2nd mortgage payments were ever in arrears.
So in other words, even though the 2nd mortgage was included in the BK and they are receiving monthly payments from the trustee, if we did sell the house, they could ask for the entire amount still?Comment
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oh, wait. So if we were able to sell the house and had enough money to buy out of our bk, then the 2nd mortgage would be discharged and they would have to release the lien...Right?Comment
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Did you happen to do a cram down on the 2nd mortgage, meaning, were you able to reduce the principal owed on the 2nd, or are you merely having the trustee make your regular 2nd mortgage payment. People in a chapter 13 will often allow the trustee to make their mortgage payments, but it generally has no effect on the status of the mortgage, and unless the mortgage gets paid off as part of the chapter 13 plan, the debtor must resume making payments directly to the mortgage holder when the chapter 13 ends.Originally posted by Bernie View Post
In any case, the answer to your question is yes, you would probably have to pay off the 2nd mortgage in full if you sell your house.Comment
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Understand that when we say "pay off in full" that is the full amount claimed in the BK13 NOT the $10,714.76 that you still owe...if you filed and had a total outstanding debt (included in BK13) of $45,000 then that's what you will need to pay (minus payments already made). Don't forget the Trustees fee...I sold my house and was able to pay completely...I filed $68,000 in debt and was able to buy out (after about 16 months) for just over $82,000. Use National Data Center and Pacer to do the figures. Good luck.John, Virginia
Case Confirmed: 5/20/05
Property Closing: 9/20/06
Buy-out and Discharged: 9/27/06Comment
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