Should I stop paying mortgage for a month or two?

[kybk]

Hello,

My wife & I are in the process of filing Chapter 13. Our lawyer is working on the paperwork (we've already given him the financials, etc.), and I figure it will be ready to file within a couple of weeks.

My big concern is having enough money to 'convert' our lifestyle from credit to cash. With that in mind, I'm wondering if we should stop making mortgage payments for a month or two? We can afford to make them (especially after not paying our credit cards), but I would like to save a bit of cash as a safety net.

We called our mortgage lender, Bank of America, about a deferral, but they wouldn't allow it.

What would be the consequences if we don't pay the mortgage for a month or two?

And will that make our credit even worse than 'just' the bankruptcy? (I.e., having late mortgage payments?)

I guess in my head, I'm thinking that being on-time with the secured loans looks better on the credit report, but that's just speculation...

Thanks for any opinions...

Mike

[cc8225]

I had my initial consult yesterday and asked the same question. I will be filing on Dec1. He suggested to stop paying on the mortgage (i have been on time) and the month that i missed would be added to the 13 over the course of 3-5 years. Plus, it may give you leverage for a modification later.

[95kindebt]

Hello,

My wife & I are in the process of filing Chapter 13. Our lawyer is working on the paperwork (we've already given him the financials, etc.), and I figure it will be ready to file within a couple of weeks.

My big concern is having enough money to 'convert' our lifestyle from credit to cash. With that in mind, I'm wondering if we should stop making mortgage payments for a month or two? We can afford to make them (especially after not paying our credit cards), but I would like to save a bit of cash as a safety net.

We called our mortgage lender, Bank of America, about a deferral, but they wouldn't allow it.

What would be the consequences if we don't pay the mortgage for a month or two?

And will that make our credit even worse than 'just' the bankruptcy? (I.e., having late mortgage payments?)
I guess in my head, I'm thinking that being on-time with the secured loans looks better on the credit report, but that's just speculation...

Thanks for any opinions...

Mike

I'd be interested to know this too. We're filing Dec. 10th, but if we don't pay the mortgage in December it would help us pay the lawyer fees GREATLY.

[debtinohio]

The thing is, if they are current you can pay them OUTSIDE of the plan.

[95kindebt]

good point.

[justbroke]

The thing is, if they are current you can pay them OUTSIDE of the plan.

Which will save you the 5-10% premium the Trustee charges for sending out checks. Very good point!

[ConfusedinOC]

So all secured (Mortgage, Vehicles, etc.) payments you are on time at filing and beyond you can pay on your own? This would give more cash to your creditors and make them much happier but the trustee may not be.

[justbroke]

So all secured (Mortgage, Vehicles, etc.) payments you are on time at filing and beyond you can pay on your own? This would give more cash to your creditors and make them much happier but the trustee may not be.

In some Districts, this is automatic. In other Districts, such as in Florida, you have to ask the Court if you can pay outside the Plan. Only the Judge can approve that... so you can't just ask the Trustee.

[klandsb]

I am in the Pittsburgh area and my secured creditors "MUST" be paid in the plan. I am sure like Justbroke stated you could fight it but I am not sure it would be worth it ..
Just my thoughts.

[iv65536]

I am in the Pittsburgh area and my secured creditors "MUST" be paid in the plan. I am sure like Justbroke stated you could fight it but I am not sure it would be worth it ..
Just my thoughts.

My thinking is that if the secured are paid in the plan, wouldn't the trustee fees make it be that much less to unsecured in the plan then? Would you rather the money go to the trustee or to unsecured?

Also, you may want to look into the expiration of the 2001 tax bill and the tax breaks from the 2009 stimulus bill in crafting your plan.

[klandsb]

Remember I am in the learning stages of this with some really GREAT teachers on here.. Just because your secured are in the plan doesnt really mean the unsecured get more it just means your pmts are higher because the trustee is paying your secured . Now the trustee is making more money in the end because she is getting her percentage of the money you pay into the plan. NO BIGGIE... Everyone wants my money so why not include her too

[justbroke]

My thinking is that if the secured are paid in the plan, wouldn't the trustee fees make it be that much less to unsecured in the plan then? Would you rather the money go to the trustee or to unsecured?

Yep... exactly. Too bad the unsecured creditors can't complain, or at least have no basis for complaints. Remember, the Trustee is trying to get paid too.

If you look at form B22C, the Trustee fee is treated as debt service... which lowers your "disposable monthly income" (DMI) dollar for dollar. They work in tandem.

[debtinohio]

I like having control of my Mortgage payment outside of the plan, but I did leave an RV and my car loan in the plan so far.

[kybk]

So...what are the pros & cons?

Our mortgage is due now (the 15 day grace is almost up). We do have enough to pay it, but I would prefer to save that money aside as a nest egg.

I work for a consulting company (I'm a computer programmer), and sometimes have to travel around (not lately, though, but it could come at any time.) I get reimbursed, of course, but it takes about a month...so I have to have funds to cover travel in the meantime. Again, nothing planned right now, but my concern is that I could be called on to travel at any time...

But...if it would be better to keep the mortgage current, then we'll pay it...I just don't understand the pros & cons...

Will it look 'bad' having this extra money in our checking account, for example?

Thanks again...