SETTLEMENT on 2nd

[MrBankruptcy]

If you're planning on filing bankruptcy, any funds, gifts or otherwise goodness of the bankruptcy as a trustee might ask for it back. Sometimes trustees go back two years in transactions. If you're going to do anything I would wait until after the bankruptcy.

[blondeinmn]

It is probably the fear of the unknown more than anything. Filing bankruptcy and settling with creditors is like a game of poker. Some people are scared by it.

[Mensa1]

Mensa, what advantage are you refering to. I don't think anyone will try to cure the default. First mortgage is upside down by $60,000.00 at least. Greentree is the servicer by the way. They are an interesting bunch to deal with.

With 60K in the tank, 1st mtg alone, then it wouldn't matter. I hadn't had specific info about your situation before. What a person wouldn't want to do is to take a property that is severely under h2o and bring it close to the surface; why risk it before filing Bk. Of course tightrope seems intent upon it. More power to him; there is risk that he simply doesn't perceive there, but maybe it will work out for him. Hope so. But it is a little bit like someone asking you a question like: "I am going to run my car into this wall over here, what is the best way to do so...?" Well there is NO good way to do that... but he still wants advice on how to do something that is just plain risky financially, and NOT a very good idea. There are many things that could go wrong there being just prior to filing a ch 7 Bk.

[CCsAreEvil]

Because a bird in the hand... you know how the rest goes!

The idea that the 2nd will settle for better terms after the BK is a logical one and may be fine in theory, but in practice, anything could happen, and you may or may not get as good or better terms.

So, I'm not looking for advice on whether to settle before or after but on the best way to pay the settlement before the BK and the effects the different payment options will have on my filing.

You are wrong! You do NOT have a bird in the hand. You are filing bankruptcy. You "will" get better terms if the 2nd is already willing to settle. But you are disregarding all the advice on this forum.

Go get a damn lawyer (or consult several) and see what he/she tells you on what you are proposing! You can get back to us on your findings.

[blessed]

Any source of funds you use will be at risk in your BK.

Here's one answer.

[tightrope]

Why?

Because a bird in the hand... you know how the rest goes!

The idea that the 2nd will settle for better terms after the BK is a logical one and may be fine in theory, but in practice, anything could happen, and you may or may not get as good or better terms.

So, I'm not looking for advice on whether to settle before or after but on the best way to pay the settlement before the BK and the effects the different payment options will have on my filing.

[blondeinmn]

Mensa, what advantage are you refering to. I don't think anyone will try to cure the default. First mortgage is upside down by $60,000.00 at least. Greentree is the servicer by the way. They are an interesting bunch to deal with.

[HHM]

I really see NO REASON why you must settle before BK. Any source of funds you use will be at risk in your BK.

They WILL settle after the fact. They will be more inclined to settle after the BK.

Unless they offer 5% or less, NOW, there is no deal worth accepting before the Bk.

[Mensa1]

Hey, overmylimit, I was wondering if being behind on your second caused any problems with filing a chapter 7 and keeping the home. Did you state your intentions as to keeping the home. Any pitfalls I should know about.

Being delinguent on the 2nd almost gives you an advantage. With that situation it is for certain that the TT isn't going to intervene when it would take X number of dollars to cure the default.

[Mensa1]

Thanks for all for the advice so far.

To clarify...

We're in negotiations to settle the 2nd right now. So they are willing to settle before BK, we just have to agree on the amount.

Things change and who knows what would happen in the future, so as I mentioned before, if they offer something we're happy with, we will jump on the offer.
Ch7 does not discharge the 2nd lien and we don't want this to hang around our necks and worry about it in the future.

So we will be settling before filing for BK and the funds will be coming from the relative or the employer.

Based on the above, what are the best ways to pay for this settlement.
I do understand that under some of the options, the amount will be added to the income for the means test calculations.

We're in PA, so will be using Federal exemptions.

Could someone chime in with specific steps for paying this settlement and the effects on Ch7 filing of each option?

Thanks

If they are willing to settle before BK they will prolly give you the paper after discharge. However, you seem adament about settling before, so be it.

Just do not accept any money from employer or relative with your name on it. Any proceeds paid by whomever should go from their acct directly to the creditor without having any endorsement from you at all. Receipt by you could effect your means test b/c the funds would be considered income.

One last thing, make certain that the release of the 2nd mtg does not in any way advantage any other creditor that might have a judgment lien. For this reason and about 6 more, you are sooooooooooooooo much better off waiting until post discharge... but I will say it no more, you know what you want to do here. Just be cautious and I would also suggest the assistance of a local title co or Atty to advise here just to make sure that things are done correctly as to release, etc and that another lien does not attach.

I'm done.

[blondeinmn]

Hey, overmylimit, I was wondering if being behind on your second caused any problems with filing a chapter 7 and keeping the home. Did you state your intentions as to keeping the home. Any pitfalls I should know about.

[Overmylimit]

I know waiting till after 341 or a discharge is probably better, but if we are offered a settlement, we will have to jump on it

Why?

Why do you have to jump on it? Because you think the banks only going to have this offer once? I am in Chp 7 and keeping my house. My 2nd is 180k and I haven't paid anything on it in a year, my 1st is current. If your house is upside down they won't foreclose on it and if you settle it before the BK is over that will probably raise questions as to how you could come up with funds for the lender but no one else...also like HHM said once the BK is over the note will really be worthless, so why not wait to settle for even less?

They will really be willing to settle once they see you have been discharged, because they will truly no you don't have the means to pay

Oh and this is constructive advice

[pcn]

What about your situation is causing the 2nd to be motivated to settle pre-bk?

[tightrope]

Thanks for all for the advice so far.

To clarify...

We're in negotiations to settle the 2nd right now. So they are willing to settle before BK, we just have to agree on the amount.

Things change and who knows what would happen in the future, so as I mentioned before, if they offer something we're happy with, we will jump on the offer.
Ch7 does not discharge the 2nd lien and we don't want this to hang around our necks and worry about it in the future.

So we will be settling before filing for BK and the funds will be coming from the relative or the employer.

Based on the above, what are the best ways to pay for this settlement.
I do understand that under some of the options, the amount will be added to the income for the means test calculations.

We're in PA, so will be using Federal exemptions.

Could someone chime in with specific steps for paying this settlement and the effects on Ch7 filing of each option?

Thanks

[tightrope]

It would be best if you learn more about BK before you even think about these things.
Settle what, the loan would be discharged

If it wasn't obvious, I'm keeping the home and the 2nd (or it's lien) is not discharged in Ch7.

Now, do you have any constructive advice?