Mortgage refi and cash out

[ramone]

Hello... I'm still waiting to hear from my attorney on this but I thought I would run this situation by you all. I am filing for a chaper 13 but my wife is not. My 341 meeting is this week. We currently have 1st and 2nd mortgages out (in my name) but our 2nd mortgage really stinks-- it's a 10yr ARM. We've talked to a bank about refinancing our 1st & 2nd into one 1st mortgage and although the closing costs are high, it would lower our monthly mortgage expense by a few hundred dollars and would eliminate the risk of rate increases / volatility on the ARM. We were going to get the mortgage in my wife's name (instead of mine). I'm wondering how the trustee will handle this- will they just want to turn the amount of our mortgage savings into increased plan contributions? What if we do a cashout to do some improvements to our heating system to lower our heating costs? Would they claim the cashout dollars for the plan. thanks a bunch

[Jman30]

First off, while in a Chapter 13, you cannot incur any debt. So you just can't refinance your current loans or take equity out. The Trustee would need to approve it and yes, they would DEFINITELY take the money and apply it towards your debts.

The only real way to do what you are thinking is to wait until you have 12 months of perfect payments....then if you have enough equity can you try doing a Chapter 13 buyout where you get a loan big enough to pay off the mortgages and pay the chapter 13 in full. If you have anything left from the loan, you can keep it.