what happens if you are late

[flyinbroke]

Backing up MSbklawyer. I was under the same impression. My lawyer told me what he is telling you. Secureds get paid before unsecureds unless they are priority, which get paid above all; my IRS bill would be paid first, as would attorney and trustee fees, then my car if I wanted to include it. Was surprised to hear student loans were not a priority. Mortgage arrears are part of a secured debt which will get paid before nonpriority unsecured debts.

[MSbklawyer]

I think SMinGA is correct in this instance. Mortgage arrears are treated as priority debt in a chapter 13 plan . . .

http://www.law.cornell.edu/uscode/html/uscode11/usc_sec_11_00000507----000-.html

Mortgage arrears are secured debts. There is a difference. A BIG difference.

Yes, if you want to keep your house, you have to pay your mortgage arrears through the plan. Yes, mortgage arrears get paid ahead of unsecured creditors. But this is not because they are priority debts. It's because the are secured debts.

Secured debts cannotcannot be secured debts. Priority debts are always unsecured debts. But not all unsecured debts are priority debts.

Back me up here, BKDefender.

[BankruptinNC]

Mortgage Arrears

I said: "Mortgage arrears must be a priority debt, to be repaid in the plan." Translated: mortgage arrears are treated as priority in a ch. 13, and are paid thru the plan.

One cannot go into a ch. 13 with mortgage arrears and not have it paid thru the plan...

My understanding: priority (by definition) debts are paid ahead of general unsecured. Priority debts include taxes, mortgage arrears, any secured items paid in the plan. A plan cannot pay general unsecured debts and leave 'priority debts' unpaid.

You seem to think (perhaps I'm not following you either) that I'm suggesting mortgage arrears is not paid in the plan? Kind of confused by your post.

I think SMinGA is correct in this instance. Mortgage arrears are treated as priority debt in a chapter 13 plan, and they must be included and paid through the plan if your mortgage payment is behind at the time of filing. When we filed, our mortgage payment was 3 months behind. We had to include the arrears in our payment plan; this is how people get to keep their house in a chapter 13 bankruptcy if they are behind in payments. Good luck to you!

[spidge]

Daglo, if the value of your house is this far underwater now, then please sit down with your spouse (if you have one) and talk through whether it makes sense to continue to tie yourselves to a house that is not going to recover back to the current loan value anytime soon (probably never). What are you going to do when it's time to sell this house and you can't get what you owe on it? You could end up owing several hundred thousand dollars and can't file bk again for years.

Please forgive me for being blunt....keep in mind that a house is just a thing, and things can be replaced. The stress and sadness that comes from trying to keep the house at all costs because you have an emotional attachment to it often forces you and your family to pay a terrible price over time.

As hard as it is, please do your best to take a cold, emotionless look at your situation. Think about what you would advise if a friend or family member came to you asking what they should do in your situation. Would you tell them to keep the house at all costs? Or would you tell them to consider walking away, finding a nice house to rent for a few years, save up a good downpayment, and start fresh?

Such a pecemist!
I think the market will come back but it will likely take many more years than the usual cycle.
Also, I do agree that a hard look at what is the best for you and yours going forward should be most important. I have drug my feet for to long and if I would have filed many years ago I would be golden now. So think about five or ten years out to better determine what is best for you. It may not be convenient but if you can fight through the inconvenience of moving for instance you will be better for it.
Whatever you do avoid using your retirment funds to try to shore yourself up. This only leads to higher taxes and you could use it for a down payment on another home later. Nothing is said that you have to use your retirment funds for credit card payments or settling them either. Try to avoid thinking that you can simply do a hardship to make up the payments to as there are steap tax penalties. You may not think its that bad but wait until you file a couple years in a row where you owe and have to struggle through that to.
Man thats a bad picture, but thats mine.

Signed frastrated, but meating with attorney on Tuesday to plan this demise(BK) out.

[freeatlast98]

My mortgage too is will BofA. They told me the same thing - I need to be at least 3 months behind before they will help. Right now, I am late with May's payment (it will be on the 1st). If I pay that in June, June's will be late. It will go on like that .... Anyway, when I file, what exactly will they do if I am late with say at least one payment? At this point, they aren't willing to do anything.

I have talked with the paralegal - she said to now wait until June to file and include any past due payments in the plan.

If I don't pay Mays payment in June, and file in June, will both payments be included - and then I can start becoming current?

One other thing. BofA called the day after I was late (1st time ever being late). That's scary.

Thank you for you reply Waitinggame

I'm also holding back May's payment for the same reason. I don't know if you have had the same experience with BofA, I keep getting to their different departments somewhere in India. These people are so scripted and really didn't have too much knowledge or compassion. Sooo frustrating.. Why must you be late to get help? I have been telling them for months that I would be falling behind if I didn't get some help. I just don't know what will happen when I file the Chapter 7. So confusing and let me say again, FRUSTRATING!!

[freeatlast98]

Question

Including arrears in a ch. 13 is very common. The arrears get paid back thru the plan, and depending on how your district handles it you'll either make ongoing payments directly to your mortgage (on time) or they will be part of your plan payment also. As long as you make your plan payment as agreed, and your mortgage payments after filing (if not part of your plan payment) on time you'll be fine.

As to whether or not the mortgage company will work with you to modify? That is kind of hard to answer. I am at the moment working with BofA on an inhouse mod. Hopefully will know soon how it goes. Got a call from my negotiator last week to say they couldn't do anything due to my expenses exceeding income - but they were calculating my net income on my 2nd job wrong. So now I'm waiting again...

For reference, I am more than 1 month behind... Trying to get a mortgage mod and resolve transportation before I refile. If the mod falls thru, we'll be ok - but it will be the difference of 60 months or 36. (We're below median, but with current mortgage payment would not have enough DMI to resolve arrears, etc. in 36 months.)

My situation is almost the same except I'll be filing Chapter 7. What will happen if I'm late on the mortgage one or two months? I'm currently holding back May's payment to BofA
in hopes they'll grant an in-house mod. Does anyone know?

[lrprn]

What happens if you have a second mortgage that is 4 months late, but your house is underwater by 250,000?

Daglo, if the value of your house is this far underwater now, then please sit down with your spouse (if you have one) and talk through whether it makes sense to continue to tie yourselves to a house that is not going to recover back to the current loan value anytime soon (probably never). What are you going to do when it's time to sell this house and you can't get what you owe on it? You could end up owing several hundred thousand dollars and can't file bk again for years.

Please forgive me for being blunt....keep in mind that a house is just a thing, and things can be replaced. The stress and sadness that comes from trying to keep the house at all costs because you have an emotional attachment to it often forces you and your family to pay a terrible price over time.

As hard as it is, please do your best to take a cold, emotionless look at your situation. Think about what you would advise if a friend or family member came to you asking what they should do in your situation. Would you tell them to keep the house at all costs? Or would you tell them to consider walking away, finding a nice house to rent for a few years, save up a good downpayment, and start fresh?

[SMinGA]

Daglo, I believe Krielly is correct.

If your 1st mortgage is more than the value of your home, and the 2nd is stripped in the ch. 13 - then I don't believe the status of the 2nd has any bearing. Its no longer treated as secured debt. Consult with your attorney to be sure, but if someone is certain they are eligible for a lien strip AND certain to file ch. 13, making any more payments on a 2nd/heloc is a waste of $ in my opinion.

[krielly]

I don't believe being late on your second (or first for that matter) has any impact on whether or not you may strip the second.

Others can chime in here, though. I don't have personal experience. Just my understanding.

K

[daglo]

There is already a lien (or two) on the property. The lien was placed when you signed the mortgage. If you are asking if the bank can start foreclosure proceedings the answer would be no - if you include the back payments in your Chapter 13 plan then the bank will not foreclose.

What happens if you have a second mortgage that is 4 months late, but your house is underwater by 250,000? The first mortgage is more than the house is worth, so can the second by "stripped" even if we are late?

[SMinGA]

Including arrears in a ch. 13 is very common. The arrears get paid back thru the plan, and depending on how your district handles it you'll either make ongoing payments directly to your mortgage (on time) or they will be part of your plan payment also. As long as you make your plan payment as agreed, and your mortgage payments after filing (if not part of your plan payment) on time you'll be fine.

As to whether or not the mortgage company will work with you to modify? That is kind of hard to answer. I am at the moment working with BofA on an inhouse mod. Hopefully will know soon how it goes. Got a call from my negotiator last week to say they couldn't do anything due to my expenses exceeding income - but they were calculating my net income on my 2nd job wrong. So now I'm waiting again...

For reference, I am more than 1 month behind... Trying to get a mortgage mod and resolve transportation before I refile. If the mod falls thru, we'll be ok - but it will be the difference of 60 months or 36. (We're below median, but with current mortgage payment would not have enough DMI to resolve arrears, etc. in 36 months.)

[newbie2]

If I do include late payments in Chapter 13 plan - (2 different banks) - will they put a lien on the property?

There is already a lien (or two) on the property. The lien was placed when you signed the mortgage. If you are asking if the bank can start foreclosure proceedings the answer would be no - if you include the back payments in your Chapter 13 plan then the bank will not foreclose.

[krielly]

You have a mortgage (s), so there is already a lien on your property......
Guess I'm not sure what you are asking??

[waitinggame]

One more question

If I do include late payments in Chapter 13 plan - (2 different banks) - will they put a lien on the property?

[waitinggame]

My mortgage too is will BofA. They told me the same thing - I need to be at least 3 months behind before they will help. Right now, I am late with May's payment (it will be on the 1st). If I pay that in June, June's will be late. It will go on like that .... Anyway, when I file, what exactly will they do if I am late with say at least one payment? At this point, they aren't willing to do anything.

I have talked with the paralegal - she said to now wait until June to file and include any past due payments in the plan.

If I don't pay Mays payment in June, and file in June, will both payments be included - and then I can start becoming current?

One other thing. BofA called the day after I was late (1st time ever being late). That's scary.