CH 7 while mortgage in forebearance?

[sivuh5]

I'm planning to file CH 7 but have been waiting to save enough to pay my atty. I know my mortgage is supposed to be current in order to keep my house. Unfortunately I did fall behind on payments recently and did not pay April, May or June mortgage. I did make a regular payment for July, under advice of the mortgage company (Wells Fargo).

I have not mentioned BK to Wells Fargo, and have been in contact with their Loss Mitigatation department many times over these last few months, waiting for them to tell me what can be done to bring my loan current. They had me complete some financial paperwork and send them paystubs and bank statements, which I did.

They recently told me over the phone that I qualified for "special forebearance" and that instead of making a regular payment for August I could make a 1/2 payment for August, September and October. Then the loan would be "reviewed for modification" in November. I still haven't received anything to that effect in writing from them. They claim they mailed it out 2 wks ago - just yesterday I asked them to please resend it because I still don't have it. Since I don't have any paperwork, I'm not really sure what they mean by "review for modification" at this point.

In the meantime, the attorney office that is acting as debt collector for my largest creditor (HFC) sent a letter yesterday saying that they are "preparing to file a claim with the Superior Court" and I should contact them. I don't have any money to pay HFC and I owe them $15,000 before fees. I do have a decent job and a regular paycheck so I'm assuming they will file for a judgement to garnish my wages sooner or later. My last payment to them was in April. Before that I had never been late.

So, it looks like I've got to get on the stick and file BK before they get their garnishment... BUT what about the mortgage??? If I file next month, during this "forebearance" period, does it mean that I'm "current" because I'm following the payment plan as they've requested? Or am I in arrears because I am 3 payments past due and they will automatically foreclose when I file?

I want to wait until Wells Fargo makes a decision about "modification" before I file BK - maybe they will put the outstanding balance at the end of the loan, or extend the terms or something... but in the meantime, what if HFC goes to court and I have to file in order to protect my wages??

I know I need to ask my lawyer, but I just wondered if anyone here has heard of a similar situation or has any opinions. I live in CT and I want to keep my house.
Thanks,
S.

[holding on]

It sounds like you haven't been served papers from HFC yet. If that is the case then you have some time to wait for the letter from your mortgage lender and better plan. Once you get served you will know the exact court date.

Since you own a home its best to be on top of HFC's lawsuit when it comes. Once they get a judgement against you and the judgement was filed in the same jurisdicition/county as your residence, the amount that you owe HFC becomes SECURED!

I know you said you plan on doing a 7, but you said you had a decent job and regular paycheck. That might push you into a 13. I know for sure that in 13 you will not want that $15,000 labeled as SECURED. I can't say though how it will be handled in a 7.

[sivuh5]

Thanks for the info.

Although I have a job and paycheck, I'm still way under the means test for a family of 3 here in CT, so no worries on a 13.

What happens in a 7 if the HFC loan becomes secured? Is it considered secured only if they put a lien on my property, or does it also apply if they garnish me? The garnishment is my biggest concern. I cannot lose 25% of my income even for one or two paychecks.

I will stay on top of the lawsuit, but I've read so many times here that people didn't even know they had a court date - they just received the judgement and it had all happened without their knowledge. Maybe that's just people who have recently moved??