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a) Mortg modification & THEN ch 13 (no catchup) OR (b) ch 13 with catch up now?

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  • a) Mortg modification & THEN ch 13 (no catchup) OR (b) ch 13 with catch up now?

    seekng some input on this decsion. I have a tons of unsecured cc debt (>100k and < 120k) and am some nmbr of mos in arrears w/ my mortg. To handle the cc debt, I know I need to do ch13 as I own a home w/ non filing spouse and want to keep the home. I am also some number of mos in arrears w/ mortgage (4). Need around 5k in cash to bring it current. Dont have this readily available (but cd go into 401k). Just got word back that was we were accepted for a Mortgage modification (MM). It will add the arrearage into the balance and pay it off from there. But it requires a 3 mos trial period before it starts.

    No lawsuits for that cc debt. Actually, there is one that keeps getting stalled since they dont show up. BK wd stay these if they come.

    The MM payment amt will have a slightly higher int rate and an increase of $50 a month more for the mortgage payment.

    Two options

    a) MM and then ch13 in 4 mos
    ---wd not add in the arrearage catchup over the committment period

    b) ch13 w/ catch up now
    ---wd add in the arrearage catchup over the committment period ( (PITI x 5)+ fees)

    another factor is -- another property I am on title and where I have some equity wd be paid down for 4 mos - perhaps another 4,000 - by waiting.

    What should I think about in making this decision? thanks for any input.
    Last edited by rayrod; 08-24-2017, 05:45 PM.

  • #2
    It's simply a mathematical decision at this point. I don't know what strategic plan you have or what your end goal would be.

    Never, ever, steal from your future to pay for today's mistakes (don't rob your 401(k) to try to save property, ever). There are many of us here that have stolen $100K - $500K from our future to attempt to fix today and it was a waste of money. The sad part is that you won't realize it was a waste, until its too late to recover.

    If you really want to save the home, then use bankruptcy to leverage the repayment of the arrearage over time.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog


    I am not an attorney. Any advice provided is not legal advice.

    Comment


    • #3
      thanks for the input. HEre is a question that I had related to this: in a ch13, and I am 4 mos in arrears, what would the mortgage amount and the arrearage amts be that the lender would claim is owed? The former is the main determinant for my equity number, the basis for the amt that I need to pay back to the creditors. Would I request a payoff amt from the lender for a given date? What would that include as far as the unpaid charges? Would it be the unpaid principle BEFORE I stopped paying? When I stopped paying 4-5 mos ago, it was $150k

      On the latter amt. the arrearage, that needs to be paid back at a 100 pct, I understand from a previous thread in this space, the arrearage should be (PITI x 4 plus fees). This would be around $5582.

      Comment


      • #4
        The arrears claim would be whatever it would take to bring the mortgage in good standing on the day you file Chap 13. Your regular ongoing monthly mortgage payments would also be paid in the plan.

        An important factor is whether you can exempt the equity in the other property and whether your DMI is enough to pay your arrears and the non exempt equity and any other non-exempt assets.

        Unless your current mortgage is adjustable, why would you modify it at an increased rate if you can take care of the arrears in a Chap 13 that you are going to file anyway?

        You may not be able to hold off that lawsuit long enough to finalize the mortgage modification.
        LadyInTheRed is in the black!
        Filed Chap 13 April 2010. Discharged May 2015.
        $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

        Comment


        • #5
          The MM answer came back- accepted and +50 / month, with a small increase to the in rate, and they would add in $5K into the balance.

          Here is a related question on the mortgage amt ( for now we will separate out the arrears question):

          in a chapter 13, i understand that the debtor ( attny) proposes a plan to pay back creditors based on what the debtor (attny) says is the mortgage amt, and then there is proof of claim that can come in ...later, after the proposed plan is made ? or is the proposed plan not supposed to be made under the POC comes in?

          MORGTAGER PROOF OF CLAIM

          *is it required in a ch13?
          *what will it be based on ?

          Comment


          • #6
            You are required to file a plan within 15 days of filing. In most districts, that plan is then revised as the case progresses towards confirmation. At confirmation, they want everything to have proof of claims and all litigation resolved (lien strips, lien avoidance, objections to proof of claims, Trustee objections, etc). (At least that's the super-majority of districts.). This keeps the number of plan "modifications" down because once a plan is confirmed, it must go through the modification process (which is different than the pre-confirmation "revision" process).

            Think of the pre-confirmation period as the time to received and process a proof of claim, revise the plan, and address any other issues.
            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
            Status: (Auto) Discharged and Closed! 5/10
            Visit My BKForum Blog: justbroke's Blog


            I am not an attorney. Any advice provided is not legal advice.

            Comment


            • #7
              is the per confirmation period 30 days? that is, is the confirmation scheduled to be about 30 days after filing?

              who issues the confirmation, the ch13 trustee or the bk judge?

              thanks for the insights into the process. On the debtor plan, is it true that the creditor amts , including secured debts, are set down in the plan according to some kind of reasonable basis, such as a current credit report for unsecured debts or a mortgage stmt for secured debt?

              back to POC for a mortgage is it required to be put forward in a ch13?

              Comment


              • #8
                Originally posted by rayrod View Post
                is the per confirmation period 30 days? that is, is the confirmation scheduled to be about 30 days after filing?
                This is very district specific. The bankruptcy code reads that a confirmation "hearing" must be held within 20-45 days of the 341 Meeting. This could be problematic if the confirmation itself had to be within that 20-45 days because the claims bar date, the time for creditors to file a claim, is typically 90 days form the 341 meeting. Most districts don't want to confirm a plan, then have individual claims still coming in causing the plan to need modification so soon. In many districts, the hearing is still held within the 20-45 days but the hearing is "continue" to a date beyond the claims bar date. Typically this is 30 days after the bar date or some 120 days after the 341 Meeting.

                Originally posted by rayrod View Post
                who issues the confirmation, the ch13 trustee or the bk judge?
                Only the court can issue an "Order" hence the Order of Confirmation comes from the presiding judge.

                Originally posted by rayrod View Post
                thanks for the insights into the process. On the debtor plan, is it true that the creditor amts , including secured debts, are set down in the plan according to some kind of reasonable basis, such as a current credit report for unsecured debts or a mortgage stmt for secured debt?
                You can read about the process on Nolo's website

                http://www.nolo.com/legal-encycloped...-13-bankruptcy

                Originally posted by rayrod View Post
                back to POC for a mortgage is it required to be put forward in a ch13?
                If the lender wants to be paid. The Trustee requires a valid "allowed" claim to be filed and on record in order to pay any creditor. A secured creditor, and any creditor for that matter, is not "required" to file a claim. They just won't receive any proceeds/distributions from the Chapter 13 case and may lose certain rights because of the automatic stay. A debtor can file a claim on behalf of a secured creditor in order to have them paid.

                Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                Status: (Auto) Discharged and Closed! 5/10
                Visit My BKForum Blog: justbroke's Blog


                I am not an attorney. Any advice provided is not legal advice.

                Comment


                • #9
                  The plan you file will be based on your disposable income. You will want to make sure you show enough disposable income to have a high enough plan payment to pay off arrears and non exempt assets and the trustee fee. You know how far behind you are, so you should be able to determine with reasonable certainty the amounts the creditors will claim. If approved priority claims are higher than can be paid by your proposed plan, then the plan will need to be amended. Hopefully, you have enough disposable income to present a feasible plan.
                  LadyInTheRed is in the black!
                  Filed Chap 13 April 2010. Discharged May 2015.
                  $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

                  Comment

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