In an active Chapter 13, and considering walking away.

[espo1357]

So, now I am reconsidering walking from my home, but I am still in the active 13.

Is that a smart move or not?

I don't qualify for the 7, so I can't go that route until my job ends (very likely to end, but I am not 100 percent sure).

My question is: What happens, in most cases, when a person in an active 13 decides to stop paying their mortgage (I am current on the mortgage now)?

What are the advantages/disadvantages of staying in the 13 and not paying the mortage?

Lastly, I don't want to get the 13 dismissed because I was being sued for some credit cards, and wanted that protection.

Thanks for any feedback on this.

[Pandora]

om goodness espo - as Katy Perry sings it "you change your mind like a girl changes clothes" One min you're keeping it, then the next min you're walking away. You need to make a firm decision and go with it so you have no regrets or remorse later on.

Do whats best for you, your lifestyle, and future, consulting with your attorney all the pros and cons to each area (keeping / letting it go).

Good luck with whatever you decide.

[espo1357]

om goodness espo - as Katy Perry sings it "you change your mind like a girl changes clothes" One min you're keeping it, then the next min you're walking away. You need to make a firm decision and go with it so you have no regrets or remorse later on.

Do whats best for you, your lifestyle, and future, consulting with your attorney all the pros and cons to each area (keeping / letting it go).

Good luck with whatever you decide.

I am worse than Katy Perry (who the hell is Katy Perrry?). I think its a good sign that I don't know who she is. I didn't know who Jusin Beiber was, until recently when that tool was mentioned by Joe Buck during the World Series.

Anyway, back to business.

I posted this in another thread, but the fundamental problem I have is that in the short term, my situation is pretty good. The BK 13 is stripping the second and protecting me from the unsecured losers. And the HAMP has me at a 2% for four more years, then 3%, 4%, and then 5% until year 32. After year 32, I owe about 50k. It looks good. But, in the long term, I know that I am going to get killed.

This is why I change my mind all the time on this.

My current plan is to just play around with the mortgage company, and see if they will further modify my HAMP. I am requested a better interest rate for the long term, and see if the 50k at the end will be dismissed. I know they are not going to help me (99% sure they are going to tell me to F OFF)...

so that I when I have to see if I still want the home, and if the home makes sense long term.

Maybe I am thinking to far ahead?

Thanks for your feedback.

[parkd]

espo: I would appreciate some info on the 2nd stripping. I was under the impression that when stripped it just becomes unsecured debt which then is thrown in with the rest of your unsecured debt to be paid back in your 60 month payment plan? Since I have no other appreciable debt other than my 60k underwater mortgage and houses here are going for about 170k and I owe about 192k on my primary and 23k on the HELOC which puts me about $45k underwater plus realtor fees and closing costs which would take it close to 60k overall. Stripping that HELOC would be nice but I was under the impression that even after being stripped it still ends up in the pile of debt to pay back in your plan. Can you elaborate more on that process? Also, is Alabama a recourse state and if not I assume that HAMP changes the loan to recourse either way. TIA!

[Pandora]

Justin Beiber .... ROFL! Kid needs a haircut....so would not fly in this house thats for sure!

Only 50K balloon at the end of your note? Thats not too bad actually - ours is less than 15K that we'll owe at the end of our note, so very doable. I think if it benefits you to stay in the house vs. renting elsewhere, then keep your 13 as is, finish it out and get your 2nd gone baby gone I dont know how old you are - but the way we looked at it with our loan mod was 1. we could afford the mortgage all the way to the end of the note; 2. the 2nd gets stripped; 3. somewhere down the line the house will have equity 4. We may both be dead in 40 years.

It's all good....

[InOverHead]

espo: I would appreciate some info on the 2nd stripping. I was under the impression that when stripped it just becomes unsecured debt which then is thrown in with the rest of your unsecured debt to be paid back in your 60 month payment plan? Since I have no other appreciable debt other than my 60k underwater mortgage and houses here are going for about 170k and I owe about 192k on my primary and 23k on the HELOC which puts me about $45k underwater plus realtor fees and closing costs which would take it close to 60k overall. Stripping that HELOC would be nice but I was under the impression that even after being stripped it still ends up in the pile of debt to pay back in your plan. Can you elaborate more on that process? Also, is Alabama a recourse state and if not I assume that HAMP changes the loan to recourse either way. TIA!

Parkd - Even tho you only asked espo hopefully you dont mind me trying to answer. I believe the the 60Mo payback plan is based on DMI as well as secured debts. The unsecured are just that - Unsecured. The 2nd lien falls in with the rest of the unsecured and they get paid whatever is left of DMI after both the trustee and Atty get theirs.

[Pandora]

Stripping that HELOC would be nice but I was under the impression that even after being stripped it still ends up in the pile of debt to pay back in your plan.

To strip a 2nd - the value of your home must be less than what you owe to the 1st mortgage - this can only be done in a Ch. 13 BK and is accomplished either by AP or by motion. For valuation of a home, generally a certified appraisal (walk-through) pretty much trumps a BPO or CMA - average cost varies from $250-400, depending on location. Once the 2nd lien strip is approved, then you're onto confirmation and get your order from the court; you will not technically void the lien until you complete your plan and receive a discharge saying you were successful.

As far as how the 2nd gets paid - yes, if approved for the strip your 2nd is paid the same as your other unsecured creditors.

[espo1357]

espo: I would appreciate some info on the 2nd stripping. I was under the impression that when stripped it just becomes unsecured debt which then is thrown in with the rest of your unsecured debt to be paid back in your 60 month payment plan? Since I have no other appreciable debt other than my 60k underwater mortgage and houses here are going for about 170k and I owe about 192k on my primary and 23k on the HELOC which puts me about $45k underwater plus realtor fees and closing costs which would take it close to 60k overall. Stripping that HELOC would be nice but I was under the impression that even after being stripped it still ends up in the pile of debt to pay back in your plan. Can you elaborate more on that process? Also, is Alabama a recourse state and if not I assume that HAMP changes the loan to recourse either way. TIA!

To file a 13 just to get rid of 23k is probably a stretch. You can get rid of it, but the 13 costs about 5k, right?

I would want to have at least 40-50k in unsecured debt to file.

Find an attorney that you can trust to run the numbers. Attorneys are crooks, except for the ones that contribute on this forum. LOL.

[parkd]

Well you see that's my point. I have no other debt and I make a good salary. My ONLY unsecured debt would be the 60k or so that I would owe the bank after I walk away from this place. I can't stay here due to the condition of the neighborhood and the town in general and I can't rent it for what my mortgage is nor do I really want the hassle of putting in money in repairs every year for a house that is underwater and is losing money every month on rent. My ch13 would undoubtedly be a 100% payback plan because I have too much DMI and I am not willing to pay back the bank more than maybe 10-15c on the dollar because I blame them for the condition of this neighborhood. They have also already been paid via TARP and QE2 and the unlimited money spigot from ZIRP that they have used to run up the price of commodities in the past year. They will not be paid back by me at 100c on the dollar. The HELOC is already unsecured debt for all intents and purposes anyway because the house is underwater. It is a wash, a zero. I just want to figure a way out of this neighborhood and paying the bank back at 100% aint happening. Ever.

[espo1357]

Well you see that's my point. I have no other debt and I make a good salary. My ONLY unsecured debt would be the 60k or so that I would owe the bank after I walk away from this place. I can't stay here due to the condition of the neighborhood and the town in general and I can't rent it for what my mortgage is nor do I really want the hassle of putting in money in repairs every year for a house that is underwater and is losing money every month on rent. My ch13 would undoubtedly be a 100% payback plan because I have too much DMI and I am not willing to pay back the bank more than maybe 10-15c on the dollar because I blame them for the condition of this neighborhood. They have also already been paid via TARP and QE2 and the unlimited money spigot from ZIRP that they have used to run up the price of commodities in the past year. They will not be paid back by me at 100c on the dollar. The HELOC is already unsecured debt for all intents and purposes anyway because the house is underwater. It is a wash, a zero. I just want to figure a way out of this neighborhood and paying the bank back at 100% aint happening. Ever.

Your best bet has to be a short sales. Some banks are offering 3k when you sell the house if you work with them. Its another brillant Obama idea, the worst President in the history of the United States by a long shot (but lets not talk politics here).

[parkd]

Negative on that front too espo. About a year ago I worked with a short sale realtor specialist who also teamed with a law office and without a valid hardship case then the bank won't agree to it. It's even worse now from what I am hearing on the street that the banks won't even talk to you about a short sale unless you have serious documentable health issues or have lost a job or serious amounts of income, etc. I have been trying to get ahold of the realtor for 2 weeks but she won't even return my emails or calls now because she probably knows I won't qualify. Staying here in this barrio for another 5 years until I hit par is not an option. I've already waited it out for 2.5 years and it only keeps getting worse here with the overcrowding, trash and dilapidation. I might make it another year at max and probably only a few more months. There are no other options other than jingle mail and the middle finger to the bank.

[ABC]

. There are no other options other than jingle mail and the middle finger to the bank.

If you're doing this on the HELOC it's a good tactic. If they are unsecured they might settle for 5 - 10 pennies on the dollar for a lump sum payment.

[espo1357]

Can someone please address my original question on strategies to stay in the home as long as possible, while in an active chapter 13 and current on the mortgage?

Chatty Kathy is walking away!

[chicagoed195]

Aside from the issue of perhaps losing your job and no longer being able to make the payments and the issue that this post doesn't provide any facts about the amount that you are underwater on the first, not keeping current on the first may not make sense.

On the positive side, you have a HAMP modification that grants you a sweetheart interest rate for the entire term of the remaining loan.

During the course of the repayment, you will be paying down principal as well as interest. With the combination of this and the potential for the market to rebound over the course of a long period of time, I can't imagine "owing" $52,000 after 32 years is much of an issue.

Once you finish your Chapter 13, simply increase your mortgage payment by a modest amount and the $52,000 may magically disappear.

If you stop paying on your mortgage, you may live rent free for a number of months, but ultimately you will have to relocate. The real question is can you rent a place that costs less than the after tax cost of continuing to pay the mortgage and real estate taxes. The next question is how much wealth potential are you giving up if you let the property go.

To me it is really a dollars and cents question. If keeping the property doesn't cost significantly more than renting and there is good potential for the accumulation of equity down the road then I would keep paying on the first. If you can save significant dollars by renting instead of owning and the house is so far underwater you will never recover, then get rid of the house

[espo1357]

Aside from the issue of perhaps losing your job and no longer being able to make the payments and the issue that this post doesn't provide any facts about the amount that you are underwater on the first, not keeping current on the first may not make sense.

On the positive side, you have a HAMP modification that grants you a sweetheart interest rate for the entire term of the remaining loan.

During the course of the repayment, you will be paying down principal as well as interest. With the combination of this and the potential for the market to rebound over the course of a long period of time, I can't imagine "owing" $52,000 after 32 years is much of an issue.

Once you finish your Chapter 13, simply increase your mortgage payment by a modest amount and the $52,000 may magically disappear.

If you stop paying on your mortgage, you may live rent free for a number of months, but ultimately you will have to relocate. The real question is can you rent a place that costs less than the after tax cost of continuing to pay the mortgage and real estate taxes. The next question is how much wealth potential are you giving up if you let the property go.

To me it is really a dollars and cents question. If keeping the property doesn't cost significantly more than renting and there is good potential for the accumulation of equity down the road then I would keep paying on the first. If you can save significant dollars by renting instead of owning and the house is so far underwater you will never recover, then get rid of the house

Thanks for the feedback.

Its about 100k plus under, but I have a renter living with me, so its not too bad. And the home is about the same as renting.

I just think if I dump and then rent, with the possibility of re-entering the market (if I still want a home), might be the better financial move.