chapter 13 and underwater and missed payments...

[billf1980]

What is the likely scenario if I stop paying my mortgage if I am underwater on the property, and currently in a confirmed Chapter 13?

[newbie2]

What is the likely scenario if I stop paying my mortgage if I am underwater on the property, and currently in a confirmed Chapter 13?

Mortgage company will file to lift the automatic stay. Then they will foreclose. Sometime during this process the trustee will want to know where you are going to live, and how much rent you are going to pay. Your 13 payment will be adjusted accordingly.

Call your attorney and be pro-active. Tell them you want to surrender your house and go from there.

[billf1980]

Mortgage company will file to lift the automatic stay. Then they will foreclose. Sometime during this process the trustee will want to know where you are going to live, and how much rent you are going to pay. Your 13 payment will be adjusted accordingly.

Call your attorney and be pro-active. Tell them you want to surrender your house and go from there.

How long do you think I could live rent free?

I just don't see them jumping at the opportunity to file to lift the automatic stay when the home is 100k under.

[justbroke]

I just don't see them jumping at the opportunity to file to lift the automatic stay when the home is 100k under.

You don't understand bankruptcy. When in a bankruptcy or after you have discharged a loan in bankruptcy... lenders are extremely motivated to move fast as their position will only deteriorate faster and without recourse.

When you're in active bankruptcy, an entirely different department deals with your loan. They move fast because they can lose big.

[billf1980]

You don't understand bankruptcy. When in a bankruptcy or after you have discharged a loan in bankruptcy... lenders are extremely motivated to move fast as their position will only deteriorate faster and without recourse.

When you're in active bankruptcy, an entirely different department deals with your loan. They move fast because they can lose big.

Still don't get it. How can they lose big, when the home is underwater by 30+%?

[justbroke]

Still don't get it. How can they lose big, when the home is underwater by 30+%?

If they don't move fast, that 30% becomes 40%. The quicker that they enforce their contractual and legal rights to foreclose, the quicker they can get that bad asset off their books.

Why do you think that a car lender moves quickly to repossess? It's not that they've already lost 10-20%... it's that every day they can lose more money. These days, with the housing market the way it is... that has become an issue with mortgage lenders as well.

[Billssuck]

I've done just what you asked about. My husband lost his job last October, 5 months into our ch13 plan. This past May, we no longer could afford our home and we contacted our lawyer to modify our ch13 to surrender our home. That has been done and our Trustee approved our new plan with rent vs mortgage. As far as the mortgage side goes, they have not started anything yet wrt lifting our automatic stay and we have seen nothing from them. We are now 90+ days late on our mortgage. So...in our case...nothing has happened swiftly by the bank yet. Once we get the Notice of Default then we're in the 60-90 day foreclosure window for our state. Before we did this, I was worried that our ch13 case would bet dismissed if we missed a payment and my lawyer said it would not since we paid our mortgage outside of the plan (although it is part of the plan). I'm glad we modified our ch13 immediately because our trustee is fully aware of what is going on. I'm just shocked it's taking this long because as part of the ch13 modification, the bank was notified that our plan was to surrender the house...no ifs, ands, or buts. Guess they're very busy these days!

[justbroke]

Yes, as Billssuck writes, and as is always the case, the lender must still follow the State's underlying non-bankruptcy laws regarding foreclosure in order to actually foreclose. This does not stop them from asking for relief from the stay. While they are two separate actions, one never knows what your particular bank will do in your particular situation.

You just need to be prepared for the inevitable.

[BreatheEasy]

Just to clarify what I understand: 1) you were proactive in letting your lawyer & trustee know that you were surrendering the house 2) you stopped paying the mortgage and are living in the house until the automatic stay is lifted (and resulting foreclosure proceedings begin).

Has the trustee expressed an issue regarding the non-payment of your mortgage (e.g. raised your payment since the disposable income should have gone up by the amount of the mortgage)?

VERY interested in this, as I will likely be in the same situation soon.

Thanks!

[parsoc48]

I'm interested in this too, almost same situation. We've tried a modification for almost a year (HSBC) using 2 different companies (one ok and one scum) and now HUD counselor...no dice, too much income and disposable income to qualify, and now the delinquencies are too high to put on the back of the loan. They will accept deed in lieu of foreclosure or short sale but our attorney said no to those, we meet with him on tues for review other options. The guy at HSBC either lied or had bad information when he told us they were granted a motion for relief of stay..our attny said no way was any motion filed!
We've kept our attny notified along this long process, and got a letter from the Trustee permitting us to seek a modification, so I think we're ok on that front. I had just assumed the 13 would be dismissed in a foreclosure..didn't think we'd get to this point, glad there might be another option.
I hate the idea of moving at this point but this wasn't our "forever" house anyway, so it might be ok.

[billf1980]

Here is the deal with this: I filed with about 30k in arrears, and decided to file for the 13 when I was getting too much heat from the cc companies from lawsuits. Now, 100 percent of my plan was supposed to go to the first mortgage to cover the arrears. I was happy with that because all of my 13 was going to a secured creditor, so it makes good financial sense because I wanted to keep the primary residence home.

A few months later, stupid mortgage company that was stringing me along for over one year on my loan modification, finally approved the modification. So, that was good, but they then removed their claim from the BK 13, and put the arrears back into the loan. I was happy paying over 1k less, of course. But, at the same time that house is still way underwater, and I was not very happy having my BK13 go to the unsecured now that the secured took the claim.

To somewhat complicate matters, my job has taken a turn for the worse, and I have no idea how long I have (company is going to be downsizings shortly). So, my future in this city is not looking that bright. So, I need some flexiblity moving forward, and that might mean finding a job in another city or going back to school.

I just want to "test" my first mortgage company on this, and see what they will do. My lawyer said that AFTER I miss two mortgage payments, then will take action. I have only missed one, and I am thinking of missing a second. Not sure what I will do yet. Likely, since I still have a job, I will only be one payment behind.

If I lose the job, that will all change and I will most likely have to convert to a CH 7.

[researchnerd]

How long do you think I could live rent free?

I just don't see them jumping at the opportunity to file to lift the automatic stay when the home is 100k under.

How long you have to live rent-free depends entirely on where you live. Regardless of the BK, your lender will still have to go through whatever foreclosure process is required in your state. In my state (GA) we discovered that the process took about five months from the first missed payment to foreclosure sale date, but this is a particularly fast state in which to be foreclosed upon. In other states you could potentially go 6-12 months or longer.