Chaprter 13 and want to surrender home and get another

[im42nut]

We filed chapter 13 about 6 months ago and did not include the house in the bankruptcy but did include the second mortgage of $60,000. We are way upside down on our house and have tried to work with the mortgage company for a modification in vain. I have a good job I have been at for almost 40 years. We are currently paying $2,400/mo mortgage and can find a comparable house for about $1,200/mo or less. What happens if we stop making mortgage payments, save the money, and find another home to purchase through an investor or at least a rent to own property? What happens to the second mortgage? can they come after the difference in the foreclosure? we live in Arizona. When do we make a modification to the bankruptcy? after we find another home or when we stop making payments?

[justbroke]

You can't just stop paying. You must work with your Attorney to get your plan modification. The attorney will work with the Trustee and then file a Motion to Modified Confirm Plan. Please know that the difference between the "allowed" rent for your family size and State/County will probably need to be paid "into" the plan and divided amongst the unsecured creditors. This may put you in a 100% plan.

I would work on the modification first with your attorney, and he will instruct you how to proceed. You may find it a little difficult to rent given that you're in an active Chapter 13. However, the Trustee can provide your payment history and that usually counts for something! (See, that's why you don't just stop paying arbitrarily!) You may also need money to pay for deposits such as for the new home you'd be renting, as well as utilities. These are all factors that you need to calculate and plan for.

Even if you go the route of purchasing a home through a "hard money" lender or investor, you will absolutely need Trustee approval. Again, just arbitrarily stopping payment on the existing mortgage, would cause trouble. Unless you have a source for the "option fee" or downpayment, I don't see how you will get into another home mortgage. There are people who have refinanced and purchased homes while in an active Chapter 13, so it does happen. However, you must have Trustee approval and a perfect payment history.

[HHM]

First, you need to find a place to rent. Then you need to get in touch with your attorney and begin the modification process.

If an investor is willing to support your purchase, great (assuming good rates), but you will not be able to purchase a home through conventional means.