Chpt 13 and 2nd mortgate payment (URGENT Advice is needed)

[Positive9]

Hi guys,
Before I ask the question. I should let you know that I ended up here due to the lost of job and my father was ill.

I have tried doing loan mod for 2 years but failed, and I've tried short sell but we didn't succeed either, now the only option is to let the house foreclosured. Well we don't have a place to go, so we decided to do chp 13. I know we have to pay both mortgages plus the trustee every month.

My questions are:

1) If I decided to stop paying on the second mortgage which is a HELOC. What will happen? What do I risk besides them trying to foreclosed? Which I don't think they will do because the home is barely worth what we owed on the 1st.

2) If I decided to stop paying on the second, will this effect my plan? Will I get scolded from my trustee, or will they even know?

Please let me know if you have any input or any advice on what you know regarding this?

I figured it will cost more for us to leave the house now and go find a rental IF we can find one that will take such a larg family. Most say they don't want more than 5 people living there...

I pray that I'll be able to find the right directions and do the right thing....

Thank you everyone.

[lrprn]

1) If I decided to stop paying on the second mortgage which is a HELOC. What will happen? What do I risk besides them trying to foreclosed? Which I don't think they will do because the home is barely worth what we owed on the 1st.

It depends on what the exact market value of your home is now vs. how much you owe on each mortgage. You said you home is "barely worth" the amount of your first mortgage.How much do you owe on each mortgage, and how did you estimate your home's current value?

2) If I decided to stop paying on the second, will this effect my plan? Will I get scolded from my trustee, or will they even know?

Yes, if you file and then stop making payments on your second mortgage, your lawyer *HAS* to know you are doing that. Your lawyer will then notify your trustee.

After filing Ch 13, your trustee is in control of all your financial assets. This includes your home. You need to have a plan for what to do with the house - keep or surrender - *BEFORE* you file.

Things can change afterwards, but throughout anything that involves an asset - and that includes stopping payments - has to involve your trustee and your lawyer as well.

Please let me know if you have any input or any advice on what you know regarding this?I figured it will cost more for us to leave the house now and go find a rental IF we can find one that will take such a larg family. Most say they don't want more than 5 people living there...

If you do file Ch 13 or Ch 7 for that matter and decide to surrender the home as a part of your bk, don't be so fast to leave your home. Even after stopping payments and the bank foreclosing, many of our filers have lived in their homes free for months, even years. Home lenders have so many properties on their roles right now, many are not moving quickly to take possession of foreclosed homes or homes surrendered in bk.

The best thing you can do now (if you haven't already) is to set up free initial consultations with at least 3-4 experienced bk lawyers who file both Ch 7 and Ch 13 cases. That's the best way to find out your best options in your unique financial situation.

Keep asking questions - we'll help you sort things out as best we can.

[justbroke]

I have nothing to add to what lrprn wrote. The key is, work with your attorney to figure out the best way to go.

Most say they don't want more than 5 people living there.

There are laws where you can't have more than five unrelated people living in the same home/residence. At one point, this was for health reasons. In many cases, it was morality issues. Still, in other cases, it was to control the number of "party houses" are in a town! (Especially college towns.)

If anyone is discriminating against a large (related by blood) family, then you should probably speak with your local housing and urban development office.

[Positive9]

It depends on what the exact market value of your home is now vs. how much you owe on each mortgage. You said you home is "barely worth" the amount of your first mortgage.How much do you owe on each mortgage, and how did you estimate your home's current value?

Yes, if you file and then stop making payments on your second mortgage, your lawyer *HAS* to know you are doing that. Your lawyer will then notify your trustee.

After filing Ch 13, your trustee is in control of all your financial assets. This includes your home. You need to have a plan for what to do with the house - keep or surrender - *BEFORE* you file.

Things can change afterwards, but throughout anything that involves an asset - and that includes stopping payments - has to involve your trustee and your lawyer as well.

If you do file Ch 13 or Ch 7 for that matter and decide to surrender the home as a part of your bk, don't be so fast to leave your home. Even after stopping payments and the bank foreclosing, many of our filers have lived in their homes free for months, even years. Home lenders have so many properties on their roles right now, many are not moving quickly to take possession of foreclosed homes or homes surrendered in bk.

The best thing you can do now (if you haven't already) is to set up free initial consultations with at least 3-4 experienced bk lawyers who file both Ch 7 and Ch 13 cases. That's the best way to find out your best options in your unique financial situation.

Keep asking questions - we'll help you sort things out as best we can.

Thank you for your time and advice.

The home is worth about $525K and we owed about $509 on 1st and $176K on 2nd.
So my guts and lawyer said that they probably won't foreclose on us anytime soon.

[Positive9]

I have nothing to add to what lrprn wrote. The key is, work with your attorney to figure out the best way to go.

There are laws where you can't have more than five unrelated people living in the same home/residence. At one point, this was for health reasons. In many cases, it was morality issues. Still, in other cases, it was to control the number of "party houses" are in a town! (Especially college towns.)

If anyone is discriminating against a large (related by blood) family, then you should probably speak with your local housing and urban development office.

We are all blood related. But I can understand why they don't want too many people living there, the wear and tears on the house can be more compared to say parents with two young kids... I understand that part. These are private rental homes, so it's ok, it's their homes and they can do or rent to whomever they wish and feel comfortable with.