Can this be possible?? or am I dreaming....

[dragonnfly]

Hello, I have been stalking around these forums for a couple months now. I have consulted my 3 lawyers. One was a idiot at chapter 13, the second was slow, and the third threw a lot of curve balls at me. We are a family of 5 in ohio, median is just over 77,000. We are at about 90,000 a year but with a big house payment (We want to keep the house) and my husband has lot of per diem I was figureing (or at least hopeful) for a ch 7. This third lawyer started talking about being able to dump one of our mortages. I dont know the correct term for dropping a secured loan and still keeping the property. The value of my house seems to be a very self determined issue. We also have a truck that I wanted to give back that is upside down. Hes worried about them coming after us for the difference in value if we do a 13. He was saying how there are several different ways to run the means test. Anyways my 2 questions are:

1. If I can get rid of one of these mortgages have them included in the plan and be done with them in five years why in the h%$# wouldn't I want to do a chapter 13? Sounds crazy. Can this be possible?

2. If we do a 13 and they come after us for the difference in the truck what difference does it make? It would just be included in the 5 year plan, correct?? or not correct??

I never thought I would be hopeful for a 13 and not a 7 but the idea of paying them for 5 years and being done sound like a dream to me. Please let me know if anyone else out there has dropped a 2nd mortgage with a 13 or a 7. Thanks dragonnfly

[car67]

From what I know.

The only way you can ditch a mortgage in bankruptcy is that your house
must be drastically lower in value then what you paid for it. The value must be less then
you first lien to try and ditch the second...... Not many people have done this and is a rare incident that it can be done.....

I think if the truck is in the 13 you will pay the trustee one payment it will cover all bils
including any vehicles you have in the plan. You cant stop paying or you lose protection
of bankruptcy.

If your vehicle is not in the 13 plan and your paying outside the plan then
you can give the truck back tell the court you wish to surrender....

Not sure what the penalty is on balances owed. It really depends on wha ttype of debts
you have, are they taxes, medical, legal? certain debtors get paid over others

[dragonnfly]

The balance owed would be the difference in what the truck sells for after we give it back and what we actually owe on it. We are surrendering the truck. I think that that would just be included in the 5 year plan like other debts. But not sure.

[lrprn]

I think that that would just be included in the 5 year plan like other debts. But not sure.

Whether you are paying your truck payment yourself or if your trustee is paying it or just paying the arrears isn't the most important question. What is important to know is when did you buy the truck compared to when you filed Ch 13 and what amount was entered for what you owe on the truck on your forms?

If you bought the truck less than 910 days before you filed, then your plan should include the full price of the loan.

However if you bought the truck more than 910 days before you filed, then the value could have been "crammed down" to its actual resale value when you filed.

Which happened in your case? Once we know that, it's easier to predict what might happen if you surrender the truck vs. trying to keep it if you do surrender your house.

[2confused]

Okay, Now I'm really confused and can't get a straight answer from my attorney. We bought our house 7 years ago for 310,000. We have made many mistakes (mostly business mistakes, or working part-time, etc.) and now owe 640,000. (terrible, I know) Our first is 504,000 and our 2nd is 134,000. At this point it is only worth about 500,000.We just had our 341 and answered that we wanted to try to keep the house. But after thinking much about it, we want to surrender it. Is this even possibe, and if so, what do we need to do?

[HHM]

Okay, Now I'm really confused and can't get a straight answer from my attorney. We bought our house 7 years ago for 310,000. We have made many mistakes (mostly business mistakes, or working part-time, etc.) and now owe 640,000. (terrible, I know) Our first is 504,000 and our 2nd is 134,000. At this point it is only worth about 500,000.We just had our 341 and answered that we wanted to try to keep the house. But after thinking much about it, we want to surrender it. Is this even possibe, and if so, what do we need to do?

That is easy, just stop making payments.

[dragonnfly]

We bought the truck in Sept of 06. We are keeping the house and want to surrender the truck. I dont want to keep the truck. When we purchased it I had a job that i had a company vehicle and only drove it for pleasure, not work. Now I have a better paying job but the $$ Im putting in the tank of that truck is eating up all the extra $$ Im making. The lawyer acted like the difference in the amount of the loan and what the truck would sell for at auction would be our problem. My question is even with giving the truck back wouldn't that difference still be just figured in our payments if they came after it? Thanks

[lrprn]

My question is even with giving the truck back wouldn't that difference still be just figured in our payments if they came after it? Thanks

If you surrender the truck in your Ch 13 bankruptcy, the lender repossesses it and auctions it off. Then you are responsible to pay the lender the difference between the auction price and the loan amount. This is called a deficiency claim and is considered non-secured debt.

For example, if your plan is paying your non-secured creditors back 10%, then you'll pay back 10% of the deficiency claim. However, if your plan is paying back 70-100% to non-secureds, then you'll have to pay back 70-100% (a lot more) of the deficiency claim.

Your lawyer can explain exactly what's going to happen in your specific situation.

[rrockinggramma]

I can't say this will happen in your case, but I included a car in my chapter 13 that my now ex let go back to the lender immediately. The first claim they filed was for the entire amount of the loan. To make a long story shorter, the vehicle was sold at auction and the car lender NEVER filed an amended claim, in fact due to the wrangling back and forth between the "surrender" issue, they aren't getting a dime in my BK.

[2confused]

Surrender house in Chapter 7?

HHM,
You say that it is simple...just stop making payments, but can this hold up/damage our discharge because we would have never qualified for the 7 in the first place if it wasn't for our high mortgage...which is our own fault because we put 100's of thousands of dollars into our home + made a bunch of stupid mistakes.

[dragonnfly]

Thanks for your answers. I know I could and should just wait and ask my lawyer. These questions swim around in your head and when the lawyer cant get you for a week the anxiety can really stress you out. Plus finding out the answers early can help think it through. Lots of times the answers to questions can lead to more questions that I wouldn't have thought of until after i stepped out of the lawyers office.

As for lien stripping which I have learned a lot about now. Sounds like a great idea until you hear our specific circumstances. My husband income varies greatly from 1000 net to 1800 net every two weeks. If we get into a 13, lien strip, and then something happens and we do convert to a 7 we would more then likely lose our house because yu would owe all the back payments on the stripped mortgage and it would come back to life. Doesn't sound good. My appointment is this AM with the paralegal to run the official means test. Thanks

[dragonnfly]

Well I met with the paralegal that does all the filling out of the forms and she really felt she could get us into a 7 and we could still strip the one small loan. I though you couldn't lien strip in a 7 but i guess you can. This is like the bast case senario for us. Im hoping it all works out, our appointment to sign the papers is Tuesday the 8th. I still havent got the word from her that it is all a go with a 7 but she should calls me today and let me know for sure. Thanks for your help.

[HHM]

Well I met with the paralegal that does all the filling out of the forms and she really felt she could get us into a 7 and we could still strip the one small loan. I though you couldn't lien strip in a 7 but i guess you can. This is like the bast case senario for us. Im hoping it all works out, our appointment to sign the papers is Tuesday the 8th. I still havent got the word from her that it is all a go with a 7 but she should calls me today and let me know for sure. Thanks for your help.

Keep us updated. But, it is fairly well settled law that you cannot strip "voluntary" liens on your residence in a 7. You can strip certain involuntary liens, i.e. judgment liens, tax liens, etc, but as far as liens on your home, if the lien is voluntary (i.e. mortgage, deed of truste, HELOC, etc), it cannot be stripped in a 7 (as was mentioned earlier, you can strip a voluntary lien in a chapter 13 if there is no equity securing that 2nd mortgage). This issue was mostly decided in 1992, Dewsnup v Timm, and not much has really changed since then.

Let us know what actually happens.

[dragonnfly]

I was hoping to find out today if the schedules and means all worked out for 7 or not. But she didn't have time to get to it and my appointment to file is not until Tuesday at 1:30. She said she will call me Monday AM and let me know for sure if a 7 will work. I am not suprised at all that the forums were right about no lien stripping in a 7. The paralegal has been doing this for 22 years and was very knowledgeable, but she did say they really just started doing the lien strips commonly again. I am probally better off not being able to lien strip because they that would put me even closer to a 13. I am ready to file and have that step over with, I really want off this rollercoater.

[dragonnfly]

Well we did it today. We filed chapter 7 not 13. So now I realize that I am in the wrong catagory for the moment. They did make us aware that we are pushing the limits for a 7. Anyways I bought up that I didn't think you could lien strip in a chapter 7. She said well we just did it and it was our first lien strip in a long time and it was a 7. We actually have 3 mortgages two larger ones and one only $10,000. They are applying to strip the small one. I did ask if it would get me closer to a 13 and she said it shouldn't. I will let you know how it all goes.