Need help with mortgage proof of claim

[katrina03]

Our confirmation hearing is Nov 15. After our 341, the trustee filed an objection, stating that she believed we had 6000 of non-exempt equity in our home. Our lawyer told us not to worry, "they always shoot for the moon". We couldn't figure out how we had any equity. This had already been figured out. We were using the highest value figure available-from the county auditor's office and even then we had no equity. Well, our lawyer is now saying at this late date that the mortgage company's total amount from the proof of claim form includes all arrearages. (102000)Well when I looked at the form, it does appear that it states that, but also shows arrearages on a separate page. I know for a fact that the amount of the claim is our principal balance and does not include all the interest/fees we also owe. We called the bank and we were told we owe the principal balance plus the arrearages (116,000 total). Our lawyer is saying that is not so. It's possible this form is not filled in correctly. The trustee wants to add 100/mo to our plan payments, which we can't possibly do. Our income is less than 2/3 of Ohio's median, with 3 kids.

When figuring equity, do you subtract exemption (10,000 Ohio), arrearages, 10% cost of sale, and principal balance from the value? Because I thought that was what we were told, and now the lawyer is saying they are not subtracting arrearages, that it's included in the 102,000. It's not though, that was our balance before all this started a year ago.

If someone can help me understand this and advise me, I would appreciate it.

Katrina

[aa06a47]

Your equity is Fair Value - what you owe. Generally cost of sale is not factored in. Not sure about arrearages, but would suspect it is treated as unsecured debt. If your fair value - what you owe is greater than 10K, then you have some non exempt equity. You may want to get a real estate appraisal of your property to prove your equity position. I would ask my attorney.

[HHM]

Well since you are already into the 13 it is probably too late for this advice, but since you are below the median, behind on your mortgage, and have no equity in the house...the house isn't really worth saving. (granted, with your size family, the only caveat would be if you could find a rental that was cheaper (even if that means sacrificing some quality).

In any event, the problem is, the arrears get paid through the chapter 13 plan, so I think the trustee is right, the relevant proof of claim is the principal pay-off (minus the arrears). To determine the value, what you really need are comps (comparable sales). You need to get a realtor to do a market analysis. If you are determined to keep the house, I would fight the trustee on the valuation.

It's not to late to convert to a 7 (assuming you qualify). What many people do in your circumstances is let the house go to foreclosure during a chapter 7, live in the house rent free (you get to stay in the house until the foreclosure auction) for 4-8 months, save money and find an adequate rental until you can get back on your feet financially.

[katrina03]

I'm still confused--are you saying that to figure equity, you can subtract the arrearages from the value? Or not? What happens to the arrearages that are being paid thru the plan if we decide to sell some day? Do we pay them off upon sale, or do they stay in the plan until paid?

I can't get my attorney to answer this question for some reason. She keeps saying all we owe is the 102,000 (the principal balance) and that the arrearages are included in that, but they're not.

The lawyer mentioned we could get a continuance possibly in order to get the appraisal. Do these usually get granted?

Thanks for your help.
Katrina

[HHM]

I'm still confused--are you saying that to figure equity, you can subtract the arrearages from the value? Or not? What happens to the arrearages that are being paid thru the plan if we decide to sell some day? Do we pay them off upon sale, or do they stay in the plan until paid?

I can't get my attorney to answer this question for some reason. She keeps saying all we owe is the 102,000 (the principal balance) and that the arrearages are included in that, but they're not.

The lawyer mentioned we could get a continuance possibly in order to get the appraisal. Do these usually get granted?

Thanks for your help.
Katrina

Opps, I see how my post was a bit confusing.

The proof of claim is the existing principal pay off (but that amount should NOT include the past due payments). Basically, proof of claim amount should "assume" you had made all your payments on time and in the proper amount. What the bank really needs to do is separate out the principal pay-off and the arrears.

And yes, you can get a continuance. Most courts will usually grant one without any question.