Please provide some advice on the handling of our mortgages

[mylife]

Good morning,

Almost two years ago we filed a 13 to save our home and the arrears (currently around 9k) are being paid back in the plan. Our 2nd with Real Time Resolutions will be wiped away upon completion of the plan. Since filing our mortgage fell behind again because of reduced income. We recently obtained a modification and now have affordable payments and the pre and post petition arrears are now a part of the loan. My questions follow:

1. We asked the atty that since we no longer have to pay the arrears in the plan if it will reduce the payment or reduce the payback time. He said to contac the ttee that it will probably reduce the time.

2. We are considering contacting the 2nd mortgage to do a settlement then converting to a 7. Is this wise? Would we reaffirm the first now that we can afford the payments? If not, will the on time payments reflect on our credit?

3. We have a vehicle that was crammed down from approximately 27k to 13k. What will happen with that? Will we have to go back to paying on the 27k.

Any advice would be greatly appreciated!

Thank you

[despritfreya]

We asked the atty that since we no longer have to pay the arrears in the plan if it will reduce the payment or reduce the payback time. He said to contac the ttee that it will probably reduce the time.

I must be on a roll this morning. . . Say what??? Removing arrears from the Plan is the job of your attny unless you have been in the case long enough that changing Plan funding (and potentially reducing the payment) will cost more in added legal fees than the amount so removed. If you are not a 100% Plan and you do not modify the current Plan, the funding not removed will simply be paid to the general unsecured creditors.

We are considering contacting the 2nd mortgage to do a settlement then converting to a 7. Is this wise? Would we reaffirm the first now that we can afford the payments? If not, will the on time payments reflect on our credit?

Never hurts to ask, but figure you will get nowhere and, whatever “settlement” the lender will agree to may cost you more than simply staying in the 13 till the end for the lien strip. Oh, and, please, if you do go to the 7 do not reaffirm the mortgage.

We have a vehicle that was crammed down from approximately 27k to 13k. What will happen with that? Will we have to go back to paying on the 27k.

If you drop out of the bk or convert to a 7 you are on your own with the lender. The lender will have the right to demand that you immediately bring the account current (full balance will be revived). While the lender may work with you, you have to assume that once out of the 13, if you cannot bring the account current, you will lose the vehicle. Alternatively, you could "redeem" the vehicle for the value listed in the Order Confirming the Plan. Not sure if you get credit for the payments made by the Trustee as I have never had a client try the redemption route.

Des.

[mylife]

Hi Des,

Thank you for taking the time to answer my questions. It seems as if it will be more beneficial for us to remain in the 13. As for the attorney, he was jerk. We are not in a 100% payback so perhaps the payments will go to unsecureds. I just assumed that the arrears will be removed from the account automatically by the mortgage company.

[despritfreya]

We are not in a 100% payback so perhaps the payments will go to unsecureds. I just assumed that the arrears will be removed from the account automatically by the mortgage company.

This bothers me. Can you tell us the amount that is still owed towards the arrears?

In cases where it is a small amount, modifying the Plan makes little sense and letting the $$ go to unsecureds is no big deal. But, we may be talking thousands of dollars. While the mortgage lender will probably stop accepting payments from the Trustee on its own, having that kind of funding go to unsecureds without looking at what it would take to remove it does not sit well with me. Making the calculation as to how such a removal will benefit you, the client, is the job of the attny. Him being a “jerk” is no excuse for him not doing his job.

Just my 2 cents, for whatever that is worth.

Des.

[mylife]

This bothers me. Can you tell us the amount that is still owed towards the arrears?

In cases where it is a small amount, modifying the Plan makes little sense and letting the $$ go to unsecureds is no big deal. But, we may be talking thousands of dollars. While the mortgage lender will probably stop accepting payments from the Trustee on its own, having that kind of funding go to unsecureds without looking at what it would take to remove it does not sit well with me. Making the calculation as to how such a removal will benefit you, the client, is the job of the attny. Him being a “jerk” is no excuse for him not doing his job.

Just my 2 cents, for whatever that is worth.

Des.

The amout still owed is about $9500. I just spoke to the Trustee's office who advised that the atty has to make sure the mortgage company amends their claim to zero. Once this is processed through the court, the ttee office will make the change and we'll most likely emerge from the plan sooner. Other than this, our next largest claim is around $10,000 for a vehicle and the rest is unsecureds. So for us it is a big deal. I agree that there is no excuse and this is why I often have to be aggressive with him.

This is more than 2 cents, it's invaluable!

Thank you!!

[despritfreya]

I just spoke to the Trustee's office who advised that the atty has to make sure the mortgage company amends their claim to zero. Once this is processed through the court, the ttee office will make the change and we'll most likely emerge from the plan sooner.

So, please confirm this in writing. . . The Trustee will arbitrarily agree to shutting the case down early without a modification to the Plan or, maybe the Order Confirming the Plan.

I question this because I am dealing with a similar issue now. Creditor was to be paid $x based upon a guess as to what was owed. The Order Confirming pays $x to the creditor. Creditor has received $y (a lesser amount) and subsequently refused additional payments stating it had been paid in full. As a result, the Trustee has asked me to send over an Amended Order Confirming changing $x to $y.

Des.

[mylife]

So, please confirm this in writing. . . The Trustee will arbitrarily agree to shutting the case down early without a modification to the Plan or, maybe the Order Confirming the Plan.

I question this because I am dealing with a similar issue now. Creditor was to be paid $x based upon a guess as to what was owed. The Order Confirming pays $x to the creditor. Creditor has received $y (a lesser amount) and subsequently refused additional payments stating it had been paid in full. As a result, the Trustee has asked me to send over an Amended Order Confirming changing $x to $y.

Des.

I think the answer to your question is yes. Once Chase amends their claim to zero, it will automatically go through the courts. Once the ttee gets it, they will automatically reduce the time left in the plan. We are about 22 months into a 60 month plan.

Your situation seems to be the same. It seems the creditor needs to amend their claim to zero and it's done.

[mylife]

We're not totally done yet. I just happened to call the mortgage company today and was advised that they need court approval of the modification. Not sure how long that takes but I'm hopeful that it will go smoothly.

[despritfreya]

I just happened to call the mortgage company today and was advised that they need court approval of the modification. Not sure how long that takes but I'm hopeful that it will go smoothly.

Standard stuff. I posted a sample motion in the forum marked "sample forms/letters.

Des.

[mylife]

Thanks Des. The attorney is charging us $300 to do this. If we have to go court he said more. Unbelievable!