Qustion on`1 st., 2 nd., & 3 rd. Mortgage

[Sammie]

I would like to thank all of you for the great information you have given my husband and I this past year. You have made the transition of being in Chap. 13 less frightening for us.

We have 3 Mortgages on our Primary residence that are paid outside of our Plan. We are current on all three. My husband works for a major Home Improvement Corporation. He found out yesterday that he is capped on his pay scale & will never get another raise. My husband told his HR Manager that he did not have any intention of leaving the company, but not getting any compensation in the yrs. to come just didn't seem reasonable with the cost of everything going up. He was told that is the way it is. He could go into Management (which he does not want to do) or stay in his current position with "zero" raises in the future. Now realizing that there will be no additional money coming into the home, we feel as though even after our Chap 13 is discharged we will still be drowning because of the Mortgages. Our combined totals for the second & third Mortgages are the same amount as the first. Is there a way we could incorporate one or two of the Mtges. so we will have breathing room to live. What options do you think we have? I wanted to come here before calling our Attorney. Thank you for any input and help. sammie

[tobee43]

i hope some in in a 13 can help you more than i can. i don't even know if you are allowed to refi when in a 13. i mean it would and could make excellent sense to lower the payments on those mortgages.


i wish you the best! you have been through the mill this past year

[Sammie]

Awww--thank you Tobee, you are sweet. We are very strong, but this just seems like it is a dead end. sammie

[dmc-2008]

I dont know if its too late now to do a lien strip but why didnt your atty consider this. Probably has something to do with income? Ask atty about a strip?

[dmc-2008]

Oh you have to be underwater on your first though.

[Sammie]

dmc Thank you. That is why he didn't do it, we are not underwater--after the bk. discharge in 2 1/2 yrs., we will exactly where we are right now, just barely making it. Before finding this great Forum, we did the unthinkable taking $42,000 out of my h 401K to pay cc's & for taking it out early had to pay $14,000 Penalty. That's when we realized we had to file Bk. We should have taken that money and paid one of the Mtges. off. sammie

[LadyInTheRed]

Sammie,

Because you are on a 36 month plan, your income must be below median. Why did you file a Chap 13? Mortgages are not discharged in a 13. So, if your mortgages are recourse loans, you might want to consider converting to a 7 so they will be discharged. If your reason for filing Chap 13 is to pay taxes, how long will it be before the taxes will be paid? Maybe you could convert to a 7 and then enter into a payment plan with the IRS.

[Sammie]

Sammie,

Because you are on a 36 month plan, your income must be below median. Our income was $58,000. Why did you file a Chap 13?We filed to get rid of CC Debt, that is the only debt that is in the Plan. Mortgages are not discharged in a 13. So, if your mortgages are recourse loans, you might want to consider converting to a 7 so they will be discharged. I don't know what a recourse loan is, one of the Mortgages was an Equity Loan & the other was converted to one. The second & third Mortgage combined loan amts. are $5,000 over the first, if this makes any sense to you. If your reason for filing Chap 13 is to pay taxes, how long will it be before the taxes will be paid? Maybe you could convert to a 7 and then enter into a payment plan with the IRS.

No, taxes owed. We paid the IRS Penalty when we withdrew money from the 401 k.

LITR Thank you, what is the process of converting to Ch. 7?

[tobee43]

Sammie,

Because you are on a 36 month plan, your income must be below median. Why did you file a Chap 13? Mortgages are not discharged in a 13. So, if your mortgages are recourse loans, you might want to consider converting to a 7 so they will be discharged. If your reason for filing Chap 13 is to pay taxes, how long will it be before the taxes will be paid? Maybe you could convert to a 7 and then enter into a payment plan with the IRS.

i had to chuckle i was just going suggest a pm's to you (i know would just have loved that!), however, i think your answer would be the closes to lead one to the right direction with this situation.

[tobee43]

you can do this sammie!! you are right, you are strong and really you have been through so much this year. i know this is just another hurdle. i was going to suggest to contact by pm LITR, but she's right on top of things there has to be a way out of this!

[Sammie]

Thank you Tobee I know we will pull this together. With everything that is going on right now in the Country this seems so trivial in the scheme of things. We have said for the last 33 yrs., as long as we have our health we can battle anything together. sammie I forgot to tell you, 2 mos. ago, we recused a little girl "furbaby" that was dumped on the side of the road, she is now getting spoiled by her new mommy & daddy & I take her out to her big "sisters" grave every day to say a prayer. We estimate that she is 5 mos. old today.

[tobee43]

ahhhhhhhhhhhh sammie you just filled my heart!!!!! it all makes live worth it. we rescued a little furry thing on his death day....he owes the house now...the yard, it's of course HIS pool. too funny. when i go, i'm coming back as HIM LOL!

[LadyInTheRed]

Our income was $58,000

How many are in your household? If under 4, did you not pass the means test? Did your attorney even consider a Chap 7 or did he say "your income is too high" and leave it at that. In other words, is he one of those attorneys who won't file a Chap 7 for any over-the-median filer because he wants to avoid any possiblity of an objection? Or is your plan only 36 months because that's all you needed to pay off the cc debt? I'm trying to figure out why you didn't file a 7 in the first place.

I don't know what a recourse loan is, one of the Mortgages was an Equity Loan & the other was converted to one.

A recourse loan is one where the lender can go after you personally for a deficiency if they foreclose and can't sell the house for enough to cover the mortgage balance. It partly depends on state law and partly on the terms of the loan. I found the North Carolina law that you can read through to determine whether your mortgage companies could get a deficiency judgement against you under state law. http://www.forecloseddreams.com/nort...ure-procedures. I skimmed it very quickly and it looks like HELOCs (Home Equity Line of Credit, not necessarily the same as a "home equity loan") can be recourse loans, even if on your residence. If your loans are not recourse loans, the fact that the Chap 13 won't discharge your mortgage is not a big issue.

LITR Thank you, what is the process of converting to Ch. 7?

I haven't been through it. But, my understanding is that you file a notice of conversion and, depending on local procedures, may have to amend or update some portions of your petition. You would then go to another 341 hearing. Creditors and the trustees would have the opportunity to object to discharge as with any Chap 7 case.

You should sit down with your attorney to discuss whether conversion is an option.

[Sammie]

How many are in your household? If under 4, did you not pass the means test? Did your attorney even consider a Chap 7 or did he say "your income is too high" and leave it at that. In other words, is he one of those attorneys who won't file a Chap 7 for any over-the-median filer because he wants to avoid any possiblity of an objection? Or is your plan only 36 months because that's all you needed to pay off the cc debt? I'm trying to figure out why you didn't file a 7 in the first place. LITR there are 2 of us in our household & our Attorney did not consider Chap 7, he did say our income is too high & it was left at that. We didn't know, we had an Attorney.



A recourse loan is one where the lender can go after you personally for a deficiency if they foreclose and can't sell the house for enough to cover the mortgage balance. It partly depends on state law and partly on the terms of the loan. I found the North Carolina law that you can read through to determine whether your mortgage companies could get a deficiency judgement against you under state law. http://www.forecloseddreams.com/nort...ure-procedures. I skimmed it very quickly and it looks like HELOCs (Home Equity Line of Credit, not necessarily the same as a "home equity loan") can be recourse loans, even if on your residence. If your loans are not recourse loans, the fact that the Chap 13 won't discharge your mortgage is not a big issue. Our Mortgages are HE loans.




I haven't been through it. But, my understanding is that you file a notice of conversion and, depending on local procedures, may have to amend or update some portions of your petition. You would then go to another 341 hearing. Creditors and the trustees would have the opportunity to object to discharge as with any Chap 7 case.

You should sit down with your attorney to discuss whether conversion is an option.

thank you so much for your help I will let you know what happens.

ahhhhhhhhhhhh sammie you just filled my heart!!!!! it all makes live worth it. we rescued a little furry thing on his death day....he owes the house now...the yard, it's of course HIS pool. too funny. when i go, i'm coming back as HIM LOL!

lol they change your lives never would I think a little one would be between my husband and myself in bed sleeping. So happy you saved your baby--and he/she saved you. sammie