Chapter 7 and Land Contract

[t606149]

I live in Wisconsin and purchased a home on a 'Land Contract' with a second mortgage to cover the 'down payment'. I did this after a divorce and wanted a place for myself and (2) children to live in.

I had my 341 meeting in October and now requested my attorney to file papers to give the house back to the mortgage company. My attorney stated that after he files the papers, he is basically out of the equation. He also stated that Land Contracts are more difficult than mortgages and have a worse impact on my future credit rating.

Does anyone know the following answers:

1. Now that the papers are filed, how long do I get to stay in the house?
2. Now that the papers have been filed, can the mortgage company still take payments out of my account? If so, when do they have to stop?
3. How is having a 'land contract' different than a normal mortgage?
4. Can the mortgage company offer me a 'modified mortgage' to keep me in the house? If so, what would the value of the mortgage be based off? Current value?
5. My bankruptcy is suppose to be completed December 12th however, my attorney stated that the mortgage company may wait until after to file foreclosure. Is that going to adversely affect my credit rating?

Any other information that you may have is greatly appreciated.

Thank you!

[tobee43]

first..who's holding the contract??? a bank?? read below...it actually is from someone in your state...you may find it helpful.

just to update some facts about land contacts vs mortgages:

http://www.housesunderfiftythousand.com/land-contract.html

"What is a land contract? It is a contract used when selling a property on payments, also called a "contract for deed," and other names in different areas of the country. This is basic seller financing. The buyer wants an easy way to buy, you want the interest, so you take payments on the property.

However, a land contract is not quite the same as a mortgage loan. You sign a contract, and the buyer takes possession of you land or home, but you do not deliver the deed until every last payment is made. That may sound safer than handing over the deed and taking back a mortgage, but it isn't necessarily. In fact, it can be more dangerous.

Which is it in your case? You'll have to ask a good real estate attorney. The laws are different in different areas. In either case you have a clear legal path to take back the property if the buyer defaults on the payments. However, the process may not be the same. Years ago, where I lived in Michigan, the time it took to foreclose and get the property back was about the same for either the land contract or mortgage, so the two seemed about equally safe.

An attorney told me, however, that because the two are sometimes handled by different courts, the time difference can be greater. In some southern Michigan counties it took six months to foreclose on a mortgage, but two years for a land contract. The lesson? Find out which takes longer where you are. You don't want a non-paying buyer to sit in your house for years."

[tcreegan]

Hi t606149,

and have a worse impact on my future credit rating.
Is that going to adversely affect my credit rating?

Doesn't matter much at all, the BK by itself is going to tank your credit score...think about it this way; you get jumped by an 800lb gorrila (the BK) and then another 800lb jumps on....since the first one squashed you flat, what difference does the other gorrila make? Not much... Don't base your BK decisions on your credit score, some basic credit rebuilding post-BK will have more effect than anything you do in the BK.

1. Now that the papers are filed, how long do I get to stay in the house? depends on how aggressive your lender is and what the foreclosure laws in your state require.

2. Now that the papers have been filed, can the mortgage company still take payments out of my account? If so, when do they have to stop? They will assume you want to keep making payments and stay on the property unless you cancel the auto-payment.

3. How is having a 'land contract' different than a normal mortgage? ...thanks tobee for the answer to this one, my answer would be h*** if I know...

4. Can the mortgage company offer me a 'modified mortgage' to keep me in the house? If so, what would the value of the mortgage be based off? Current value? They can but probably won't, odds on getting a loan modification are around 1 in 10 The lender will dictate what value to use, they may just use the one they have already, or they might order a new appraisal. Depends a lot on the age of the original appraisal

5. My bankruptcy is suppose to be completed December 12th however, my attorney stated that the mortgage company may wait until after to file foreclosure. Is that going to adversely affect my credit rating? Covered this above

The best option may be to stay in the house payment-free until the final stages of foreclosure and bank the payments to fund your post-BK life.

Good luck w/ everything,

Tom in Colo