Announcement

Collapse

Forum Rules (Everyone Must Read!!!) (updated: 04/28/2015)

Welcome to the Bankruptcy Forum. Bankruptcy (BK) Forum is known as BKForum.com and will be referred to as BKF hereinafter. In order to ensure a long term success of our vibrant community, we have established certain rules and guidelines to which everyone must adhere to. Please take your time to carefully read our rules, before you start to participate in the community.

Things you agree to do:
BKFORUM.com (BKF) users agree to use the search function before starting a new thread. This prevents duplicate discussions and allows for better organized topics.

All BKF users agree to read the sticky posts which may be available at the top of a forum page. These Sticky posts often contain valuable information. They may also outline more rules and guidelines specific for that particular forum, stickies are put in place by that forums moderator(s) or admin(s).

Things you agree not to do:

All BKF users agree not to call people names or write a post simply to make a personal attack, or get a negative reaction; this behavior is not allowed on our forum. The use of derogatory language aimed at anyone will be severely dealt with. There is no need to agree with each other, or to even like each other. However, by signing onto BKForum.com you agree to treat each member and guest with the respect they deserve. No threats or personal attacks will be allowed.

All BKF users agree not to discuss, engage, or encourage any behavior or activity which violates the law. Discussion of drugs, violence, murder, theft, vandalism, fraud or any other issue which could be used to help individuals break the law is strictly forbidden.

All BKF users agree not to "bump" old threads, unless there is a specific benefit to the community by doing so. But in most cases, please don't post in very old threads, instead start new threads.

All BKF users agree not to attempt/use another members account. It is against BKF rules to use any account other than your own. Impersonating another member will result in an immediate ban. It is also against the rules to open more than one account in your own name without permission from a moderator or administrator. If you have been banned for any reason, it is against the rules to open another account. If you were banned temporarily and you are caught using another account you will be banned permanently. Choosing a moniker which is similar in either sound or spelling as a moderator or administrator is strictly forbidden.

All BKF users agree not to private message any moderator, admin, or other member with questions related to their personal circumstances (Questions about the forum or issues with the forum are ok). This forum only works when members share their experience and insights with everyone.

Things you agree not to post:
All BKF users agree not to post any derogatory/racist/or sexist remarks. This includes attachments, links and all information contained within posts, signatures, and avatars, failure to comply with this rule will result in a permanent ban.

All BKF users agree not to post any copyrighted or trademarked information without the express written permission of the owner(s) / proper citation of source.

All BKF users agree not to post any real names, addresses, telephone numbers, email addresses, social security numbers, or any other personal details (their own or other people's).

All BKF users agree not to post links, pictures, attachments, videos, or the like of pornographic content, objectionable material or extreme violence, whether cartoon or real.

All BKF users agree not to use BKF for advertising purposes without a written contract between yourself/company/agent and the administration of BKF. Blatant advertising will result in a ban.

All BKF users agree not to spam the forums. Spam includes but is not limited to posting erroneous, non-relevant-useless, off-topic, or meaningless posts. Spam may also include posts which contain no text, or large areas of blank space between lines. Simply posting emoticons without text is considered spam. BKF is the largest bankruptcy message board and all the content is intended to help other users. Please help us improve the quality of our forum by making sure that your posts are well-worded, spell checked, grammatically correct and syntaxed.

Regarding actions of moderators and administrators:

The forum is no place to air out your opinion or be judgmental of our staff and its capabilities.

All BKF users agree not to abuse or mistreat moderators or administrators. It is against BKF rules to post any information regarding bans or any other action taken by a member of the moderating or administrative team. If you wish to discuss bans or warnings please do so via PM. To place a complaint against a moderator, send a PM to a super moderator. All Moderators are equal, any decision made by a moderator must be adhered to. If a moderator tells you something you do not like, do not go to another moderator looking for a different answer. If you are caught doing this you will be banned. The moderators work as a team and respect the decisions made by their peers and will help enforce them unless an administrator tells them differently.
If you have an issue with how the forum is run, then notify one of our administrator and we will look into the situation. We have in the past and still do appreciate any input that you offer this forum. But critical input and/or judgmental postings towards the staff will result in you getting banned.


Should you find a thread offensive or out of line, then notify a Mod in a PM so they can evaluate the situation and do the action deemed necessary.

All moderators do have active "other" lives outside of the forum and help moderate this forum in their spare time throughout the days and weeks.

If you have a problem with a member or Mod follow the proper channels of reporting it.

BKF reserves the right to delete any posts which contain anti-BKF comments or discussion. Any bashing of moderators or administrators, or any of their discussion or actions will also be deleted, and the responsible posting party(s) will be banned. Any public anti-BKF advertising, communication, or posts on another forum will result in permanent bans as well.

All warnings and bans are decided by individual moderators and administrators. Warnings are preferable to bans however, for serious offenses and repeat abusers bans will go into effect. The length of the bans can vary from several hours to permanent.

All messages posted or sent including through PM are the property of BKforum.com.

All BKF users agree not to advertiser on the forum (Niether by posting, private messaging or using your signature). If you are a company/attorney/legal adviser wishing to advertise on the site or sell a product, you must contact the head administrator and inquire about our advertising packages.

All bankruptcy related opinions expressed on BKForum.com are those of their authors and not necessarily of BKF, its staff or representatives.

You agree not to copy any material/post/content from BKF without written permission from our head administrator .

By posting on this forum you agree to these terms and conditions, including any punishment deemed appropriate by moderators or administrators in the event of an offense.

Administrators/Moderators can change these rules at any time without prior notice.
See more
See less

Chapter 13 Mortgage Lien Strips.

Collapse
This is a sticky topic.
X
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • #31
    Okay. Bear with me I'm a little thick. I did read all of the thread too!

    My primary residence lets say is worth $365k (I'm still waiting on my actual appraisal).

    The original first was $350k (now owe $332), the 2nd is $98k.

    From reading, I won't be able to strip the second right?

    Will I be able to strip it from what the value is? Meaning, since the first is secure by $350k and the house is worth $365, that only leaves $15 to secure the second.

    So would I be able to strip $83k from the 2nd and just pay the 15k in my plan?

    Confused? Me too!
    CH13 - filed 30 JUL 09, $1521 @ 60 mos (100% payback)
    Done!!! - 01 Jul 2014 I'm free!! Discharged 9/23/14!

    Comment


    • #32
      The home MUST be worth less than what is owed on the first. In chapter 13, it's an all or nothing deal with a lien strip on a primary residence.

      Thus, your home must appraise for less than $332,000 (the balance of your first mortgage). If the home won't appraise for less than the amount owed on the first mortgage, the 2nd mortgage stays...in full.

      Comment


      • #33
        Originally posted by HHM View Post
        The home MUST be worth less than what is owed on the first. In chapter 13, it's an all or nothing deal with a lien strip on a primary residence.

        Thus, your home must appraise for less than $332,000 (the balance of your first mortgage). If the home won't appraise for less than the amount owed on the first mortgage, the 2nd mortgage stays...in full.

        Got it!! Thanks. So is this cram down not an option either? I'm in VA. I can't even just the 2nd from what I owe to value of the home? (Meaning the 365 minus the 332 leaving 33k) Isn't that what the cram down is?
        CH13 - filed 30 JUL 09, $1521 @ 60 mos (100% payback)
        Done!!! - 01 Jul 2014 I'm free!! Discharged 9/23/14!

        Comment


        • #34
          *that should have said: I can't even just pay the 2nd from what I owe to the value of home*
          CH13 - filed 30 JUL 09, $1521 @ 60 mos (100% payback)
          Done!!! - 01 Jul 2014 I'm free!! Discharged 9/23/14!

          Comment


          • #35
            Alrighty then, let me try this again. I guess from the responses (or lack thereof) I didn't make my question clear.

            1. Is "cram down" the same as "lien stripping"?

            2. If my 1st is valued at $370k (I owe $332), my second I owe $98k. I know I can't do the strip because the house is not valued at $332 or less. Right?

            3. Okay. So overall I owe $430k (1st & 2nd). In CH13 can I take and pay off the amount that the 2nd is covered by over 60 months? Meaning $430k - $370k = $60K gone, and pay $370k - $332k (what I owe) = $38k to the 2nd mortgage over 60 months.
            Then the 2nd is paid off after discharge. Is this feasible?

            Sorry to be a pain but I wanted to make sure I was clearly understanding. Thanks for info!
            CH13 - filed 30 JUL 09, $1521 @ 60 mos (100% payback)
            Done!!! - 01 Jul 2014 I'm free!! Discharged 9/23/14!

            Comment


            • #36
              [QUOTE=zeezee;284056]Alrighty then, let me try this again. I guess from the responses (or lack thereof) I didn't make my question clear.

              1. Is "cram down" the same as "lien stripping"?

              Cram Down example. First mtge is 350,000. 2nd is $50,000. House value today is $300,000.00. So heres what happens. $300,000 is secured, $50,000 is placed in unsecured debt. 2nd mtge of $50,000 is stripped.

              Comment


              • #37
                [QUOTE=h0usekeeper;284544]
                Originally posted by zeezee View Post
                Alrighty then, let me try this again. I guess from the responses (or lack thereof) I didn't make my question clear.

                1. Is "cram down" the same as "lien stripping"?

                Cram Down example. First mtge is 350,000. 2nd is $50,000. House value today is $300,000.00. So heres what happens. $300,000 is secured, $50,000 is placed in unsecured debt. 2nd mtge of $50,000 is stripped.
                Although in principal correct, that example is misleading when it comes to distinguishing cram down vs lien strip.

                Note, you cannot cram-down a loan on your primary residence, section 1322(b)(2). Section 1322 prohibits modifying the rights of secured creditors who have a security interest in the debtor's primary residence. The reason you can lien strip is that 1322 says "holders of secured claims", the courts have interpreted that to mean if a claim holder is "entirely unsecured", then 1322 does not apply because the creditor does not have a secured claim. However, if there is even 1$ of a security interest in a primary residence, the claim and lien stay. Again, it's all or nothing. You cannot "modify" (e.g. cramdown) a mortgage, but you can lien strip assuming the lien has no "secured value"

                So, to provide you the clear answer, YOU CANNOT CRAMDOWN a 2nd Mortgage.

                Thus, in your example,
                1st $332,000
                2nd $98,000
                Home value $370,000
                Given those numbers and assuming the house is your primary residence, you are stuck. A chapter 13 can do NOTHING to change anything about those mortgages.

                Cramdowns are typically used on personal property (cars, computers etc). Your car is worth $10,000, you owe $20,000, you can cram down the car and pay the value ($10,000) inside the chapter 13 plan (caveat, note the 910 day rule).
                Last edited by HHM; 06-07-2009, 10:41 AM.

                Comment


                • #38
                  "Until recently, Massachusetts and Rhode Island Bankruptcy Courts differed in their application of the Code and Nobleman to the issue of what constitutes a "principal residence." In Massachusetts, bifurcation of secured claims had been liberally granted. Even though the real property was clearly the debtor's principal residence, other uses to which the property was put were generally not a bar to modification. See, e.g., In re McGregor, 172 B.R. 718, 719 (Bankr. D. Mass. 1994) (debtor, residing in one unit of a four-unit apartment building, was permitted to modify the mortgage); In re Brown, 175 B.R. 129, 131 (Bankr. D. Mass. 1994) (modification permitted where debtor resided in one unit of a two-unit complex).

                  Comment


                  • #39
                    Okay. Thank you. I'm stuck. I was just hoping that I may have had another avenue to pursue. Housekeeper and HHM, thanks much for the responses!
                    CH13 - filed 30 JUL 09, $1521 @ 60 mos (100% payback)
                    Done!!! - 01 Jul 2014 I'm free!! Discharged 9/23/14!

                    Comment


                    • #40
                      Originally posted by h0usekeeper View Post
                      "Until recently, Massachusetts and Rhode Island Bankruptcy Courts differed in their application of the Code and Nobleman to the issue of what constitutes a "principal residence." In Massachusetts, bifurcation of secured claims had been liberally granted. Even though the real property was clearly the debtor's principal residence, other uses to which the property was put were generally not a bar to modification. See, e.g., In re McGregor, 172 B.R. 718, 719 (Bankr. D. Mass. 1994) (debtor, residing in one unit of a four-unit apartment building, was permitted to modify the mortgage); In re Brown, 175 B.R. 129, 131 (Bankr. D. Mass. 1994) (modification permitted where debtor resided in one unit of a two-unit complex).
                      Note the distinguishing facts, these were debtors who owned multi-unit complexes. In those cases, the issue was the definition of "primary residence", not whether you could cram down on a primary residence. If the real estate is not your primary residence, you can cram down (e.g. investment properties, vacation homes etc.)

                      Comment


                      • #41
                        Does the 2nd need to be current as a qualification for a lien strip? As a related question, I understand that people stop paying cc's once they determine a ch13 is in their future. Do people also stop paying their 1st and 2nd, while getting organized to file, since in a ch13 you can cure arrearages? What are the +/-'s of doing so? Thanks.
                        1/15/10 Filed ch7 2/18/10 314 meeting
                        2/22/10 Report of No Distribution
                        4/20/10 Discharged 5/20/10 Closed!

                        Comment


                        • #42
                          Originally posted by pcn View Post
                          Do people also stop paying their 1st and 2nd, while getting organized to file, since in a ch13 you can cure arrearages? What are the +/-'s of doing so?
                          Negatives: If you deliberately stop making asset payments on assets you want to keep, then your monthly Ch 13 payment will be higher to cover the larger arrearages. Why do that to yourself for five years when you could be paying less? Also not paying mortgages that won't be stripped, car payments, etc. before filing just gives you more cash to get rid of before filing.

                          Positives: Frankly, I can't think of any long-term positives to deliberately *not* make asset payments you can afford to make before filing. The large majority of Ch 13 lawyers allow filing with the remainder of their fee rolled into the Ch 13, so there's no need to use the saved mortgage payments to pay the lawyer's fee in full before filing.

                          If you aren't making mortgage and car payments before filing because even after stopping unsecured payments, you can't afford them, then you can't afford them after filing either.

                          If other members can think of compelling reasons to not make asset payments before filing when the filer can afford them, please post them.
                          I am not a lawyer and this is not legal advice nor a statement of the law - only a lawyer can provide those.

                          06/01/06 - Filed Ch 13
                          06/28/06 - 341 Meeting
                          07/18/06 - Confirmation Hearing - not confirmed, 3 objections
                          10/05/06 - Hearing to resolve 2 trustee objections
                          01/24/07 - Judge dismisses mortgage company objection
                          09/27/07 - Confirmed at last!
                          06/10/11 - Trustee confirms all payments made
                          08/10/11 - DISCHARGED !

                          10/02/11 - CASE CLOSED
                          Countdown: 60 months paid, 0 months to go

                          Comment


                          • #43
                            I was thinking specifically of the lien strip, and that it would be similar to cc's, in that paying it would be throwing away money if one intended to file. I personally could find several things to "use up" that money for a few months while preparing to file. So is it correct that in a lien strip the 2nd doesn't need to be current to qualify?
                            1/15/10 Filed ch7 2/18/10 314 meeting
                            2/22/10 Report of No Distribution
                            4/20/10 Discharged 5/20/10 Closed!

                            Comment


                            • #44
                              Originally posted by pcn View Post
                              I was thinking specifically of the lien strip, and that it would be similar to cc's, in that paying it would be throwing away money if one intended to file. I personally could find several things to "use up" that money for a few months while preparing to file. So is it correct that in a lien strip the 2nd doesn't need to be current to qualify?
                              I have the same question concerning the 2nd mortgage.

                              Also, if filing a ch 13 can I go past due on my first in order to pay the legal fees? I could make it up by taping the 401k through a hardship withdrawal using a notice of default and become current for filing.

                              Just trying to figure out where to come up with the $$ for the legal fees.
                              11/23/'10-filed ch 13. 1/6/'11-341, confirmed. Below median. Plan completed 11/30/2015. DISSCHARGED 4/4/2016.JP

                              Comment


                              • #45
                                Chapter 13 Mortgage Lien Strips.

                                If you file Chapter 13 Bankruptcy you may be able to have the court remove the second or third mortgage from your home. This is possible if there is no equity in the second or third mortgage. Assume the home is worth $300,000.00 and there is a first Mortgage of $320,000.00 and a second mortgage of $85,000.00 on the house. In this example since the balance of the first loan is higher than the current market value of the home, there is no equity in the second loan rendering it an unsecured debt. You can ask the court to remove the second mortgage under these circumstances.
                                divorce certificate

                                Comment

                                Unconfigured Ad Widget

                                Collapse
                                Working...
                                X