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Not sure what to do now about Schedule J - going to have to surrender the house

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  • Not sure what to do now about Schedule J - going to have to surrender the house


    I'm stumped and not sure what to do next. I was hoping that some of you that have been in a similar experience could help.

    Originally, I'd selected to retain the house and pay (didn't check surrender or reaffirm) on my Chapter 7, as I was only a little over a month behind. It was filed this way. The mortgage company had sent me the paperwork to do a loan modification and I believed I could get my mortgage caught back up. The mortgage amount is listed on my Schedule J as an expense.

    A few days ago I called them to get the ball rolling on this, and I found out that they will not consider me for a modification.... as I have had one within the last two years. They said they "automatically" send the loan modification paperwork out anytime someone is late (when I asked why they sent it if I wasn't able to get one). The most they are willing to work with me is if I send two house payments a months for the next few months. The two payments a month can't be broken up. They have to be paid together. Otherwise, it's foreclosure.

    I haven't had my 341 meeting yet and I am pro se. I am way below the median income level, and I honestly don't see how I can afford to pay two house payments a month. As it stands, I am a negative amount on my Schedule J.

    If I'm going to take this option to make the two house payments a month, I have until the end of next month to start it. After my 341 meeting. I'm not sure if I should amend my paperwork and change it to surrender and take off the mortgage expense on my Schedule J. If I do this, should I use the IRS standards for rent in my area, even though I'm not renting yet? I've seen some posts on the board where people have left the mortgage expense on their Schedule J when surrendering, while others did not. I'm sooo confused on this and just not sure what to do. I just don't want to do anything wrong.

  • #2
    I don't know for certain, but I don't think you need to update the statement of intention or Schedule J. Your petition was accurate on the date you filed. You intended to stay and pay and completed schedule J accordingly. If the question comes up at the 341, I would just say that you are trying to modify the mortgage. Since you are well below median, the US trustee probably won't have much interest in your Schedule J anyway. But, if it did come up, would using IRS standards increase your disposable income enough that unsecured creditors would receive significant payments in a hypothetical chap 13?

    It is possible that the mortgage company will file for relief from the automatic stay since you are delinquent, but they also may just wait until you are discharged to move forward with further collection efforts and foreclosure. If they do file for relief, you simply don't respond and relief will be granted. In any case, if foreclosure is unavoidable, stop all payments and stay until foreclosure is complete. That should give you some time to save for a deposit for a rental.
    LadyInTheRed is in the black!
    Filed Chap 13 April 2010. Discharged May 2015.
    $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!


    • #3
      I looked at the IRS standards for housing for a family of my size and it's nearly three times what my mortgage is, so having to use it (and if I rent the cost will be more than my mortgage in my area) would not increase my disposable income enough to support a 13. I was told by the mortgage company that they would wait until the Chapter 7 is done to resume collections but they did warn it moves pretty fast after that point. Thanks for chiming in and sharing this information. This board has been awesome.


      • #4
        I second that you don't need to modify your schedules unless surrendering the house means that you have more exemptions available to protect other property. If you are definitely a "no asset" case then I wouldn't bother. The schedules and Statement of Intentions were correct as of the filing date, and you did not know at that time that you'd be unable to modify your mortgage.

        That being said, you should be in no hurry to move out and pay rent. Depending on where you live, and whether the house is in an HOA, it might take the lender a year or more to foreclose, and that's money which you can save by staying in the house and NOT paying rent somewhere else.


        • #5
          Today in the mail I received a motion for relief from stay and abandonment from the mortgage company. I had talked to the mortgage company a few weeks ago and was working on an informal repayment plan starting next month in order to get caught back up over the next few months. I was told at that time that they would not do anything in regards to foreclosure while I was in bankruptcy and I talked to someone else today and they said it's not true...
          Is it normal for them to file this when you're two months behind on your mortgage or is it something that is typically done routinely? I really thought I would have more time to either get caught up or if I had to move. Now, they are offering me the chance to send in a lot of paperwork to see if I'd qualify for a formal repayment arrangement but they are warning that I might not qualify for this. At this rate, it seems like I'll be foreclosed on the day after the bankruptcy is done. I just feel really upset about this. I have checked around for housing options locally and I'm going to end up having to spend a lot more monthly if I have to rent as rent prices are crazy here. And at the pace they are going, I just feel like I'm not going to have time to really do anything. I'm even concerned now that they wouldn't honor the repayment plan if I'm approved for this. I don't qualify for a modification, as I found out a few weeks ago. Getting caught up in one lump sum is not an option for me.
          Any thoughts or experiences?


          • #6
            It is completely normal for a motion for relief from stay (RFS) whenever you file bankruptcy, are in arrears, and not attempting to cure the arrears through a Chapter 13. It allows a creditor to exercise any and all of their pre-bankruptcy options under State non-bankruptcy law. In other words, it puts them in you back in the same position that you were before you filed; more specifically, no injunction against taking action against the property via foreclosure. The only restriction would be that they can't pursue you personally.

            As for whether the bank will work with you, I would ask for a forbearance and perhaps to get a modification again. You may simply not be able to afford the mortgage, tax, and insurance payments.

            As for how long it can take them to foreclose... is any person's guess. Unless you're in a Deed of Trust State, where the foreclosures are non-judicial, your foreclosure could take 6-12 months or even longer depending on your State foreclosure laws.
            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
            Status: (Auto) Discharged and Closed! 5/10
            Visit My BKForum Blog: justbroke's Blog

            I am not an attorney. Any advice provided is not legal advice.


            • #7
              You may want to talk to a bankruptcy attorney about converting to Chap 13 or filing a Chap 13 after your Chap 7 is discharged. You may not find an attorney willing to convert a pro se Chap 7 to a Chap 13. You won't be eligible for a discharge in the Chap 13 filed immediately after Chap 7 discharge, but you won't need one since your debts would all be discharged in the Chap 7. In a Chap 13, you can have up to 60 months to catch up on the mortgage. Since your income is far below median, you may not be able to show enough disposable income to fund a Chap 13, but it is worth exploring.
              LadyInTheRed is in the black!
              Filed Chap 13 April 2010. Discharged May 2015.
              $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!


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