Amendments, modifications - can someone explain these?

[chakra7]

Hi. I've currently been in a Ch.13 since Sept. '06. I have two mortgages and two arrears payments. I was recently laid off two weeks ago and have filed for unemployment and will receive severance through Feb. of next year. My main loan is an ARM and I tried refinancing last year with no success - the loan officer said I didn't make enough income for a refi. The refi was recommended by my BK attorney once my loan adjusted and I explained to him I could not afford the payments which were taking my entire paycheck. The loan has since adjusted again in Jan. of this year. He then suggested I sell my house to which I put it up for sale in May, got a contract on it to sell in Sept. and the contract fell thru because the real estate agent says she didn't know how much was owed on the house when she reduced the sales price and couldn't get a short sale approved in time to close - Buyer was not longer interested at that point. On top of all of that, payroll at my former place of work was never adjusting my garnishment to match the order for the new amounts. When I brought this to their attention, they insisted they weren't receiving the orders and couldn't adjust the garnishment w/o the orders. I alerted my attorney to ck into it to which he said they should have gotten them but that I still needed to have sent in the difference. I couldn't make up the difference because I could no longer afford the increased payments which I told him when the loan had its first adjustment. Fast forward to today and a hearing has been had to dismiss my case with my attorney responding that my payments had been being made, but not at the correct amount and that I have until Jan. 5 to make up all missed payments. I do not have this money and will not have this money. I've told him I've been laid off and am actively seeking work. I asked if he can amend my plan to which he says he can't but he hasn't tried. I think my circumstances called for an amendment long ago. He recommends that I convert to a Ch. 7 and let my home go into foreclosure. I asked about a short sale to which he says I'd have trouble converting to a 7 if I did one, possibly being denied a 7. Is this attorney lying to just have me pay an additional $700 to convert? He has already gotten his $3000 for the Ch.13.

Can someone expound on this? I called my first mortgage and explained the situation. They say I can try to do a loan workout but have to get my attorney's permission first. Yet, I'm wondering why my attorney did not offer this option in addition to just converting. The first mortgage is with Wilshire Credit Corp.

[Flamingo]

Here's where this went wrong from what I can gather from your posting. It appears your payment was modified when your mortgage payment increased this past January. However, your employer kept withholding and sending in the old amount and claims to have never received the modification information/order from the Trustee stating when the new payments were to take effect. It is the Trustee's responsibility to get that information to your Payroll Dept. and as soon as you saw the amounts were not changing after a few times you need to contact your attorney right away so that they got changed to the correct amount. If you were making the payment on the new modified amount to the Trustee after the date stated in the order and were not late and did not miss any, there should be no problem and this has to be brought to the attention of the Trustee by your attorney. However, your second issue is you are now unemployed and only have severance to last you until February. After February you will have no income to fund your Plan. Your attorney needs to straighten out the wage order information if I am understanding your posting correctly but then you have a bigger fish to fry if you cannot find employment after your severnce runs out as that would cover you as your regular income until February.

[StartingOver08]

Well, just based on your post, it does sound like a CH 7 would work better for you. Converting to a 7 from a 13 sounds like it would be in your best interest - but I am only going by your post.

Now is the time to dump the house. Live in it rent free as long as the lender will let you. It takes many months to foreclose, but every area is different so check with your attorney. Typically in our area (S. FL) the foreclosures are taking 9-12 months and sometimes even longer. So you would have quite a long time without a payment. With the ARM in place and the payments are already too high for you - it sounds like a hardship to make your mortgage. Can you rent something less expensive after you 'free rent' period?

BTW, don't do a short sale. It does not help you and it does not read better on your credit report. Just get rid of the house in a CH 7.

[chakra7]

Here's where this went wrong from what I can gather from your posting. It appears your payment was modified when your mortgage payment increased this past January. However, your employer kept withholding and sending in the old amount and claims to have never received the modification information/order from the Trustee stating when the new payments were to take effect. It is the Trustee's responsibility to get that information to your Payroll Dept. and as soon as you saw the amounts were not changing after a few times you need to contact your attorney right away so that they got changed to the correct amount. If you were making the payment on the new modified amount to the Trustee after the date stated in the order and were not late and did not miss any, there should be no problem and this has to be brought to the attention of the Trustee by your attorney. However, your second issue is you are now unemployed and only have severance to last you until February. After February you will have no income to fund your Plan. Your attorney needs to straighten out the wage order information if I am understanding your posting correctly but then you have a bigger fish to fry if you cannot find employment after your severnce runs out as that would cover you as your regular income until February.

The mortgage actually adjusted twice - first last July and then again this past January. Payroll claims they never received orders for either adjustment so they kept the garnishment amount the same. I did indeed bring this to the attention of my attorney and to the payroll dept. to which nothing seems to have ever been done. At that point, after the loan adjusted the first time, I could not make up the difference. At that time, I informed my attorney of this who then suggested I attempt a refi. I tried working a refi with a loan officer for straight months who late told me that he couldn't do it; I didn't make enough income. My attorney said sell the house; my house is currently up for sale now and has been since May - a contract in Sept. fell thru at the closing.

I am actively looking and submitting my resume for employment so I do have a little time, not much, but a little time, but I thought reading through several old posts that when an individual's circumstances change, i.e. - loss of job, illness, etc.- a plan amendment can be requested and I've also read on here about hardship discharges. My severance ends in mid-Feb. I have a bit of cushion after Feb. in terms of income that I don't want to go into here, so I won't be entirely w/o funds for the plan if it can be amended. There have been numerous threads on here about loan modifications inside of the bankruptcy and I thought maybe I can try that with my attorney's permission.

[chakra7]

Well, just based on your post, it does sound like a CH 7 would work better for you. Converting to a 7 from a 13 sounds like it would be in your best interest - but I am only going by your post.

Now is the time to dump the house. Live in it rent free as long as the lender will let you. It takes many months to foreclose, but every area is different so check with your attorney. Typically in our area (S. FL) the foreclosures are taking 9-12 months and sometimes even longer. So you would have quite a long time without a payment. With the ARM in place and the payments are already too high for you - it sounds like a hardship to make your mortgage. Can you rent something less expensive after you 'free rent' period?

BTW, don't do a short sale. It does not help you and it does not read better on your credit report. Just get rid of the house in a CH 7.

I spoke with the mortgager on the first loan who informed me that if I were to convert to a 7, I could then try a modification on the loan after it goes back into foreclosure. I also was inquiring as to plan amendments and/or modifications inside of the bankruptcy. I've read numerous, tons of posts, threads on these two things discussed here on this site and thought wouldn't those things be just as much of a consideration as converting to a 7 and letting house go.