Dismiss and Refile to Strip 2nd (need helP really lost)

[irisrob]

Hello, I am in my 4th year (confirmed 4/2009) of 5 year plan. I have paid 25k into the plan with a balance of 7k. Now my house is underwater and I approached my attorney he suggested I dismiss my case and refile to strip the 60k amount owed on my second. My current monthly payment is 600 per month. I just can't see the benefit of going another 5 years paying 600 per month. I am currenlty completing my scheulde J (expenses) i asked for the law office to first give me an estimate of my projected monthly payments before I agree to dismiss my case. I can add more expenses to get my monthly down expecially since i modified my first mortage and the payment is 400 per month less..........

so when they refile if i have almost paid back all of my secured debt (7k left to pay) what is the new plan payment based on? I also had 65k in credit card debt. When I look at the breakdownof my balance i owe about 4k to IRS and then it shows one unsecured creditor receiving the remaining amount of 3k.

Wht to Do???

[TheBajan]

Hi there,

What a choice. As for me, there would be no choice. I am so grateful my plan is only 3 years. More than even having a higher payment, I dreaded the idea that it could have been 5 years. So for me, I wouldn't do it. I want to taste my freedom to much to consider the thought of BK for 10 years of my life. However, that's me.

From what you are saying, if you do not refile, you will be discharged in a year with only your first and second mortgage. It sounds like when you filed your house had more value than it does now and you COULD refile and strip the second of the 60k. Mathematically, with the numbers you are giving us, it means that you would actually only be stripping off 24k. The reason is because you would be adding the additional $600 a month to the trustee. So the real question is, do you want to spend the money to dismiss and refile, stay in Ch 13 for six more years just to get rid of roughly 23K (after court and lawyer fees)?

The housing market WILL eventually turn around. Your house may take 10 years to recover the lost equity but if your intention is to stay there, does it matter? If you don't intend to stay that's a whole other story. The advice here would be completely different. Food for thought. Hope it helps.

The Bajan

[justbroke]

First, is your house worth less than your first mortgage? Then I'd ask... how did you reach that value and how close is it to the mortgage balance on your first? That's going to be the first hurdle to overcome and you really need to have a very good idea (not a guess, supposition, or Zillow) of the valuation.

Then, you have to ask what the impact of going into a NEW Chapter 13 for 3-5 years will be like, when you're so close to finishing. The question is... is it worth it? What if a creditor or Trustee decide to object to confirmation and say your plan is in bad faith (that you did this solely to strip the 2nd)? I'm not saying that they could or would. It's just something to keep you thinking.

Not to frighten you, but to my point, ask your attorney about In Re Cabral, Eastern District of California, 12-12050-A-12. The pattern is similar. Cabral actually voluntarily dismissed their Chapter 12*, so that they could re-file (4 months later) and strip the junior mortgages. The bank (Bank of America) complained and filed an objection to confirmation on "bad faith". The judge agreed, and Cabral's second Chapter 12* was dismissed. This case ruling was from October 2012, so it is quite recent and may be persuasive.

Again, listen to your attorney. Ask the right questions. Only you can balance what is right for you and your personal financial position.

I would also listen to what The Bajan wrote. Is it worth it? That may be the first question. Combine that with an "outside" possibility that the junior lienholders would squawk (object to confirmation) if you did this... dismissing your case would be fatal to all the hard work you've put into your current Chapter 13 should your case be dismissed on bad faith. Yes, more things to think about!

* Note: In Re Cabral is a Chapter 12 case. Chapter 12 cases are no different than any Chapter 9, 11, or 13 case. It is just used by family farms so any caselaw is relevant to any other Title XI Reorganization proceeding, of which Chapter 13 is one.

[despritfreya]

* Note: In Re Cabral is a Chapter 12 case. Chapter 12 cases are no different than any Chapter 9, 11, or 13 case. It is just used by family farms so any caselaw is relevant to any other Title XI Reorganization proceeding, of which Chapter 13 is one.

Just gotta say this since I have just successfully Confirmed my 1st Chapter 12. . .

Big difference between 12s and all other Chapters. . . you can modify a loan that is solely secured by the Debtor's principal residence. Love it. . . love it. . . love it.

Des.

[justbroke]

Just gotta say this since I have just successfully Confirmed my 1st Chapter 12. . .

Big difference between 12s and all other Chapters. . . you can modify a loan that is solely secured by the Debtor's principal residence. Love it. . . love it. . . love it.

Thanks Des... now I need to go purchase some cattle and some farm equipment. Please be on the lookout for my future post titled "So, we bought a farm...".

[dmc-2008]

I think it is encouraging because it must not have been that hard on you to be in 13!!

[catleg]

I think you might be better off completing your chapter 13 and then stop paying the 2nd and try to negotiate a settlement.
Does the 2nd have a balloon payment coming due at some future point?

[irisrob]

Thanks for the advice, I have a hamp modified 1st and got the 2mp offer for the second but they did not reduce any of the principal...i ignored the 2mp offer just trying my best to get what I can. my house is now worth much less of course than when i filed in 2009, so the refiling would strip the 2nd. i have a full appraisal .......I asked my bk attorny to work up my case before I make any decisions to refiling. honestly if my new payment plan is under 300 (with my new added expenses) i may consider it and then pay it off after 3 years. Yes Lord I am so tired of this 5 year plan, I am 57 years old and trying to have as much added income when I retire....so that 150 per month may not be much next year but when i retire it will make a difference.....

no future ballon payment just th 60k i owe which i have NOT paid for over 1 year...but I will loose my protection next year so I need to do something........

[dmc-2008]

What does your atty advise?

[Pandora]

OMG 10 years in a CH. 13... holy crap.

I'd try to settle the 2nd if possible....