Out of Curiosity...Q about Post Petition Foreclosure

[alorth]

I have looked on the board for a succinct answer to this, but I cannot seem to find one. My apologies.

So my question is, IF a person who is in a Chapter 13 decides their house IS too much AFTER their Plan has been confirmed, and they decide they want to walk away from the house, and say the house is underwater, what happens to the deficiency left after the eventual foreclosure sale?

Are you responsible for it, or does it some how get tacked onto your unsecured credit and discharged upon successful completion of the Plan, even if it happens - for example - 2 to 3 years into your 13?

How does the process even work? And does it then start to involve more atty. fees?

[HHM]

You need to amend the plan to surrender the house. If you don't, you remain responsible for the debt. A chapter 13 does NOT discharge mortgage debt.

[alorth]

You need to amend the plan to surrender the house. If you don't, you remain responsible for the debt. A chapter 13 does NOT discharge mortgage debt.

Right....I do understand that.

But my question is, can the Plan be amended at ANY time in the 5 years to surrender the house?

And also, what happens with the deficiency, if any, after the foreclosure sale?

[jwhit]

Right....I do understand that.

But my question is, can the Plan be amended at ANY time in the 5 years to surrender the house?

And also, what happens with the deficiency, if any, after the foreclosure sale?

Are you in a judicial or non-judicial foreclosure state? I am surrendering my house as part of my Ch 13. I knew this from my research but my attorney confirmed that even if I wasn't, I could walk from my house at any time without any liability since I am in a non-judicial state. I would not (and will not) be responsible for any deficiency, foreclosure fees, back property taxes, etc. For some reason, I thought that I had read that Michigan was a non-judicial state??

I am curious though, if you have no liability after a foreclosure sale, why would you need to amend the plan? Is it just because your expenses may go down?

[papie]

We amended our Chapter 13 plan to surrender our home when we were 1.5 years into a 36 month plan. I live in a judicial foreclosure state with recourse. My lawyer told me that as long as we completed our Chapter 13 or converted to a 7 the mortgage company could not come back on us for the deficiency balance....even if the house sells AFTER our bankruptcy is discharged.

[papie]

Are you in a judicial or non-judicial foreclosure state? I am surrendering my house as part of my Ch 13. I knew this from my research but my attorney confirmed that even if I wasn't, I could walk from my house at any time without any liability since I am in a non-judicial state. I would not (and will not) be responsible for any deficiency, foreclosure fees, back property taxes, etc. For some reason, I thought that I had read that Michigan was a non-judicial state??

I am curious though, if you have no liability after a foreclosure sale, why would you need to amend the plan? Is it just because your expenses may go down?

You have to amend the plan because 1.) your expenses may change, which could effect your Chapter 13 payment, 2.) an automatic stay is put on your home when you file, and the court has to give the bank permission to foreclose 3.) if your mortgage payment is included in your Chapter 13 payment the trustee needs to know that they no longer need to pay the mortgage company.

You don't amend your plan after the foreclosure sale. You amend your plan as soon as you decide to let the house go into foreclosure.

[jwhit]

I can't believe I forgot about the automatic stay and in plan mortgage payments! I was just thinking about balance deficiency.

[alorth]

Are you in a judicial or non-judicial foreclosure state? I am surrendering my house as part of my Ch 13. I knew this from my research but my attorney confirmed that even if I wasn't, I could walk from my house at any time without any liability since I am in a non-judicial state. I would not (and will not) be responsible for any deficiency, foreclosure fees, back property taxes, etc. For some reason, I thought that I had read that Michigan was a non-judicial state??

Michigan is a Non-Judicial State.

The following is what I was told by a Greenpath rep.

There is also a bonus 3-month "waiting period" in Michigan law that kicks in once you have been notified by the bank's lawyer's that they are initiating foreclosure. This is for counseling, or work-out, or whatever, and occurs BETWEEN the foreclosure initiation (when you are turned over to Chase's lawyers) and the sherriff's sale, which almost guarantees 7-8 months in your house in Michigan BEFORE the sherriff's sale, then another 6 months AFTER the sale, so basically I've been told you can stay in your house for roughly a MINIMUM of a year in Michigan without making payments, and that's on the low side.

Now again, I'm no lawyer, this is just what I understand from talking to Greenpath. maybe I'm wrong?

[Pandora]

alorth -

Dont have an answer to my ? so I figured its worth putting out here:

Does the timeline you were given above have any default / set back to your org. Ch. 13 filing date? Meaning - if you keep the house say, 2 years out of your 5 year plan - and then you decide to let it go - does the time of default begin at that moment you give up the house or does it revert back to your date of filing? Can your lender then foreclose immediately vs. the timeframe above due to requesting a lift of the automatic stay?

[HHM]

Yes, you can amend at any time, although you push your luck the longer you wait, if you are in a 60 month plan and amend to surrender in month 58, you may face a "bad faith" challenge.

As for foreclosure itself, once the bank receives permission from the BK court (lift of auto-stay), the bank must still follow state procedures. Depending on circumstances, sometimes the bank can pick up where they left off, other times they must start over. Generally, if we are talking about a mid-stream chapter 13 amendment, the bank will need to start the foreclosure process from scratch.

As for the chapter 13 itself, there shouldn't be an issue with amending the plan for the deficiency, the mortgage debt is already "included" in the bankruptcy. All you are really doing is changing the statement of intent and making the necessary changes to the plan itself, but I wouldn't think you would need to amend your creditor schedules.

[alorth]

alorth -

Dont have an answer to my ? so I figured its worth putting out here:

Does the timeline you were given above have any default / set back to your org. Ch. 13 filing date? Meaning - if you keep the house say, 2 years out of your 5 year plan - and then you decide to let it go - does the time of default begin at that moment you give up the house or does it revert back to your date of filing? Can your lender then foreclose immediately vs. the timeframe above due to requesting a lift of the automatic stay?

Sorry...but I have no idea about that. The Greenpath guy didn't really get into that. My GUESS is no because we are now paying outside of the Plan, and are on time, and INTEND on staying that way. My original question was more for my information.

In fact, I would assume that the lifting of the stay will take additional time as well, which may even lengthen the time that one might stay "rent free" in their house, but maybe not. Maybe they motion to lift the stay after missing only 1 payment once you are in BK, which might take 1-2 months to process, then foreclose immediately (faster than they might in a non-BK circumstance), but then you still get the extra 3 months waiting period under Michigan law BEFORE the sherriff's sale gets posted?

Its all very confusing. That's kinda why I started the topic.

[8forme]

We just moved 2000 miles across country and are in year 1 of a 5 year 13. Our attorney advised us to stop paying the mortgage and the mtg. company will file to lift the stay and forclose eventually. We stopped paying 3 months before we moved and heard not one peep from the mortgage people. I finally called them right before we left and asked them to start forclosure proceedings. They did and we have the hearing for motion to release the first week of May. It took about 6 weeks from asking them to initiate and the hearing date. We are in a non-judicial state also. Our attorney stated any deficiency, if claimed, will go along with our unsecureds. Though our mtg. company said they rarely file deficiency claims.

[alorth]

Ah....I found out the "extra" 3-month period in Michigan law is a "delay" to request modification AFTER the foreclosure track has begun.....apparently this was added into Michigan law in 2009....but the caveat being the homeowner has to REQUEST the delay and attempt modification....its not automatic so far as I can tell.

I found this (sorry if I'm not supposed to link to a website):

http://stopcreditor.com/truth-about-michigan-foreclosure-law-changes/

Less than two years ago, Michigan foreclosure law was changed in the face of the greatest foreclosure crisis since the Great Depression.

Mortgage companies were required to send an initial foreclosure notice that gave the homeowner the opportunity to request a modification.

If he did so, the house went off the foreclosure track for 90 days, time for the mortgage company to review documents and decide whether to grant a modification, and on what terms.

Apparently, because of this, legislators are trying to reduce the post-sale redemption period from 6 months to 3 months. I don't know if they've been successful in doing that.

[jwhit]

Michigan is a Non-Judicial State.

The following is what I was told by a Greenpath rep.

There is also a bonus 3-month "waiting period" in Michigan law that kicks in once you have been notified by the bank's lawyer's that they are initiating foreclosure. This is for counseling, or work-out, or whatever, and occurs BETWEEN the foreclosure initiation (when you are turned over to Chase's lawyers) and the sherriff's sale, which almost guarantees 7-8 months in your house in Michigan BEFORE the sherriff's sale, then another 6 months AFTER the sale, so basically I've been told you can stay in your house for roughly a MINIMUM of a year in Michigan without making payments, and that's on the low side.

Now again, I'm no lawyer, this is just what I understand from talking to Greenpath. maybe I'm wrong?

Do you know how fast the lenders are sending the notice of default in Michigan? My last payment (due to a number of reasons) was 12/10. BOA finally sent the notice of default in January and my trustee sale was supposed to be last week until my filing stopped it. In Oregon, after the sale, you have 30 days by law before they can kick you out. I am not keeping my house but today I received a notice that they lowered my escrow payment and my next payment would be due 5/1 with this new $300 lower payment with no mention of how much I am behind. Thanks for posting this thread!

[alorth]

Do you know how fast the lenders are sending the notice of default in Michigan? My last payment (due to a number of reasons) was 12/10. BOA finally sent the notice of default in January and my trustee sale was supposed to be last week until my filing stopped it. In Oregon, after the sale, you have 30 days by law before they can kick you out. I am not keeping my house but today I received a notice that they lowered my escrow payment and my next payment would be due 5/1 with this new $300 lower payment with no mention of how much I am behind. Thanks for posting this thread!

I don't know myself. I'm guessing an OFFICIAL Notice of Default is different from the letters they send you in the mail saying you are late? I did get an acceleration warning letter from Chase after I was a month and 10 days late, but I have since caught back up. Chase STILL doesn't seem to recognize we are under BK Stay. Go figure.

Are you sure they can kick you out in only 30 days after the Sale in Oregon? That sounds too short, but who am I to say? I think in Michigan, as long as you are living in the house, you have a 6 month redemption period AFTER the Sale before you get evicted. That redemption period can be shorter if you move out and are not living in the house, but then, what does it matter?