Help! Three questions...

[ljadams08]

Here is our situation:

We live in Florida.
We filed Ch 7 on April 1, 2010.
341 Meeting was May 25 and all went smoothly - looking forward to discharge!
We have a home worth $315K and totally 'under water' with both 1st and 2nd mortgage. Note: Home was appraised for $675 in 2005...amazing...

First mortgage is with Wells Fargo of $390K which we are working on getting a modification - seems positive at this point.
We have a second mortgage with Wachovia/Wells Fargo for $189K.
Prior to BK both 1st & 2nd were in foreclosure proceedings since 2009.
We will not reaffirm either one.

Question 1: If we are able to secure a mod with the first mortgage, what then happens to the 2nd mortgage?

Question 2: We have been given a large check from a family member - too large to cash as we do not have enough funds in accounts. How soon can we deposit? Is the trustee monitoring our accounts prior to discharge? Will the trustee/BK court be able to seize those funds (if deposited) or do we have to wait until discharge/closing to deposit?

Question 3: How will we know which debts are discharged? We listed our $13K that we owe IRS for 2005-1040 (meets all criteria for discharge of taxes) and would love to know!

Thanks so much for any insight!!!

[newbie2]

Here is our situation:

We live in Florida.
We filed Ch 7 on April 1, 2010.
341 Meeting was May 25 and all went smoothly - looking forward to discharge!
We have a home worth $315K and totally 'under water' with both 1st and 2nd mortgage. Note: Home was appraised for $675 in 2005...amazing...

First mortgage is with Wells Fargo of $390K which we are working on getting a modification - seems positive at this point.
We have a second mortgage with Wachovia/Wells Fargo for $189K.
Prior to BK both 1st & 2nd were in foreclosure proceedings since 2009.
We will not reaffirm either one.

Question 1: If we are able to secure a mod with the first mortgage, what then happens to the 2nd mortgage?

Question 2: We have been given a large check from a family member - too large to cash as we do not have enough funds in accounts. How soon can we deposit? Is the trustee monitoring our accounts prior to discharge? Will the trustee/BK court be able to seize those funds (if deposited) or do we have to wait until discharge/closing to deposit?

Question 3: How will we know which debts are discharged? We listed our $13K that we owe IRS for 2005-1040 (meets all criteria for discharge of taxes) and would love to know!

Thanks so much for any insight!!!

The 2nd mortgage doesn't disappear. The lien will still be on the home. Only your responsibility to pay goes away with your discharge.

I don't know the answer to your question about the large sum to deposit, or the IRS discharge. Your attorney would be the best one to advise you of this.

[ljadams08]

Thanks! So the 2nd doesn't 'go away' and there will be a lien, which I'm assuming we would be responsible for if the house is sold. Can they still foreclose? Even if we get our mod on the 1st and make the payments on the 1st?

[newbie2]

Thanks! So the 2nd doesn't 'go away' and there will be a lien, which I'm assuming we would be responsible for if the house is sold. Can they still foreclose? Even if we get our mod on the 1st and make the payments on the 1st?

Yes, they can still foreclose. Would they? Probably not, as they would have to pay off the first mortgage. There are quite a few good threads here about others who have offered settlements to the 2nd lien holders after their bk has closed. Do a search for them and it will help guide you in what you should do with this 2nd lien. Good luck!

[justbroke]

Question 1: If we are able to secure a mod with the first mortgage, what then happens to the 2nd mortgage?

Unless you filed a complaint to determine dischargeability, it remains in force.

Question 2: We have been given a large check from a family member - too large to cash as we do not have enough funds in accounts. How soon can we deposit? Is the trustee monitoring our accounts prior to discharge? Will the trustee/BK court be able to seize those funds (if deposited) or do we have to wait until discharge/closing to deposit?

The Trustee has no control over "post" petition income, unless it's an inheritance by bequeath or demise, or property (real or personal) that's party of a dissolution of marriage settlement.

Question 3: How will we know which debts are discharged? We listed our $13K that we owe IRS for 2005-1040 (meets all criteria for discharge of taxes) and would love to know!

Only if you meet all the criteria. That is the tax was due and payable without penalty 3 years before filing; that appears OK. Second is that you actually filed more than 2 years before filing your bankruptcy; I can't answer that. Third is that if it was from an assessment of tax due, then that must have been at least 240 days before filing your bankruptcy; I can't answer that.

If you actually do meet the criteria, you either file a complaint to determine dischargeability so that you're sure or just go through discharge and see what the IRS does later.

Also, if the IRS has turned the tax into true (recorded) lien, you'll definitely need to file a complaint and probably a motion to determine secured status and/or motion to avoid lien.

[ljadams08]

Unless you filed a complaint to determine dischargeability, it remains in force.

If you actually do meet the criteria, you either file a complaint to determine dischargeability so that you're sure or just go through discharge and see what the IRS does later.

Also, if the IRS has turned the tax into true (recorded) lien, you'll definitely need to file a complaint and probably a motion to determine secured status and/or motion to avoid lien.

We do meet all the criteria for discharge. If for some reason IRS is NOT discharged (i.e. - lien - which I don't think is the case), can we file the complaint at that time or will it be too late?
We did NOT file a complaint on the 2nd mortgage - is this advisable? Or wait and see?

We hate to call our attorney with all these questions as each phone call gets pricey and she usually talks 'around' the question, giving no direct answer or advice. THanks so much!

[justbroke]

We do meet all the criteria for discharge. If for some reason IRS is NOT discharged (i.e. - lien - which I don't think is the case), can we file the complaint at that time or will it be too late?

You can re-open your case at anytime to file a complaint if it's to determine dischargeability without charge. (Note: I don't know if the "without charge" is true in all Districts. My District in Florida allows the re-opening for a complaint for dischargeability and/or stay violations, without the $260 re-opening fee.)

We did NOT file a complaint on the 2nd mortgage - is this advisable? Or wait and see?

The second "mortgage note" (the promissory note) is actually discharged. The security instrument, known as the "mortgage" or "deed of trust" is NOT voided through the discharge. You'd have to have a very good reason to void the security instrument and this is usually not done in a Chapter 7.

We hate to call our attorney with all these questions as each phone call gets pricey and she usually talks 'around' the question, giving no direct answer or advice. THanks so much!

Yup, they tend to do that. Mostly because some answers are complex and convoluted and just generate 10 more questions!