filing ch 7 this week need help fast!

[nichole04]

I hope someone can help me with this question. We are filing ch 7 at the end of the week and our attorney informed us last night that we we try to reaffirm our house the UST is going to play nasty hardball since we are a good bit over the median but we qualify on the means test. We were going to check reaffirm on the 1st mort but not on the other the 2nd mortgages. She said that we should check surrender on all mortgages but we could still stay and pay. We are current on all mortgages but my question is: will the mortgage companies try to foreclose if we check surrender even though we keep current on our payments? We are underwater on our house. Thanks.

[keepinitreal]

If you do check "surrender" on all mortgages, I'm curious if your claimed housing expense could possibly be disallowed and lowered by the trustee, with the reasoning being that you are admitting you won't have the high mortgage payments moving forward. If that happens, you may no longer qualify for a Chapter 7. Just verify with your attorney that this won't happen.

[justbroke]

I hope someone can help me with this question. We are filing ch 7 at the end of the week and our attorney informed us last night that we we try to reaffirm our house the UST is going to play nasty hardball since we are a good bit over the median but we qualify on the means test. We were going to check reaffirm on the 1st mort but not on the other the 2nd mortgages. She said that we should check surrender on all mortgages but we could still stay and pay. We are current on all mortgages but my question is: will the mortgage companies try to foreclose if we check surrender even though we keep current on our payments? We are underwater on our house. Thanks.

I answered part of this in another posting. Since Georgia is in the 11th Circuit, the lender could complain that you selected surrender yet stay in the property.

The landmark case was Taylor v. AGE Federal Credit Union (In re Taylor), F.3d 1512, 1517 (11th Cir. 1993), and is still good law today. However, this is if a creditor complains... and most of them do not complain about you staying in the home. If the creditor holding your mortgage is an ankle biter (credit union, small bank), you may run into some trouble. However, I wouldn't expect any issue from major banks.

The only issue I can see with being over-the-median and not reaffirming (or not indicating reaffirmation), is that the United States Trustee (UST) may still go for a dismissal under the Totality of Circumstances. Of course, your attorney will know better than I do for how your Trustees deal with the particular issue of surrendering secured property while claiming the expense, in your District. (Good catch keepinitreal.)

Strategy is important in over-the-median income Chapter 7 cases.

[nichole04]

We originally were going to state our intention of reaffirming the 1st but not doing so with the other mortgages. Will this affect our debt to income ratio? Our lawyer thinks we can still claim the mortgage expenses in the ch 7 even if we check surrender but I am not so sure. I hope she doesn't have things mixed up. I really want to keep the house and try to settle the 2nds after discharge. My first mortgage is with ocwen, 2nd heloc is with suntrust, 3rd mort is with suntrust and fourth is with citimortgage. Any other advice would be greatly appreciated!

[justbroke]

We originally were going to state our intention of reaffirming the 1st but not doing so with the other mortgages. Will this affect our debt to income ratio? Our lawyer thinks we can still claim the mortgage expenses in the ch 7 even if we check surrender but I am not so sure. I hope she doesn't have things mixed up. I really want to keep the house and try to settle the 2nds after discharge. My first mortgage is with ocwen, 2nd heloc is with suntrust, 3rd mort is with suntrust and fourth is with citimortgage. Any other advice would be greatly appreciated!

This is District and United States Trustee (UST) specific. If you are over the median, the UST will be looking for ways to poke at your case, and using secured debt payments on your Schedule J when you are surrendering, is a nice juicy target for them.

If your attorney thinks it will be okay, then your attorney must be ready and willing to defend your petition, should the UST pounce. I'm not saying that the UST will pounce, but in an over-the-median case, it can happen. They call it a 707(b)(3) motion to dismiss for totality of circumstances.

[nichole04]

My attorney has already told me that the UST will more than likely give us a hard time since we are over the median by over $20,000 so that is why I don't understand why she is suggesting we check surrender when she knows we want to do a ride through and keep the house. She told us that if we check reaffirm with not intention of doing so that it is not ethical when you are stating under oath that is your intentions. I think she is a by the book kind of lawyer and I don't 100% feel great about this. I also know she wanted us to do a chapter 13 but we did not want to since we technically qualified for either one and there are no guarantees she could strip all of the
2nd mortgages since our first mortgage is $5,000 below the appraised amount. She thinks she could strip them all since the two loans with suntrust are cross-collateralized or something. Our case is kind of complicated since we have a lot of personal and business debt and I just want to wipe it out in the ch 7 and try to settle the 2nds b/c I don't want to be in ch 13 prison for 5 years and we definately would have to do five years we were told. What should I do?

[justbroke]

Ask her about "other: retain and pay". If she says that in the 11th Circuit (Georgia, Florida, Alabama), you must select either redeem, reaffirm, or surrender... then she is definitely by the book.

I hope the UST is nice to you.

[nichole04]

Thanks justbroke. I will ask her. Thanks for your help!