Modify mortgage afte chapter 7

[dtimo]

We think we can file chapter7 in California and keep the house--the question being will our income be sufficient to make the payments.

The valuation on the house is $188,000.
Our first mortgage is $170,000 payment $2280
Our line of credit secured against the house is 121,000 payment $345.
Both are with BofA

The payments on the first are high because it was 15 year fixed so is scheduled to be paid off 8 years from now.

Payments are current. no lates.

My question is can I modify the loan into a 30 year fixed (reducing payments $1000 per month) after discharge?

Can the court force me to modify and put me into Chapter 13

[momofthree]

The courts do not have the ability to modify or "force" the mortgage co. to modify mortgages.

Since you've provided no info on your income, we can't tell you whether or not it is "sufficient to make the payments."

Good luck!

[newbie2]

We think we can file chapter7 in California and keep the house--the question being will our income be sufficient to make the payments.

The valuation on the house is $188,000.
Our first mortgage is $170,000 payment $2280
Our line of credit secured against the house is 121,000 payment $345.
Both are with BofA

The payments on the first are high because it was 15 year fixed so is scheduled to be paid off 8 years from now.

Payments are current. no lates.

My question is can I modify the loan into a 30 year fixed (reducing payments $1000 per month) after discharge?

Can the court force me to modify and put me into Chapter 13

Have you considered a Chapter 13 to strip the 2nd mortgage? I know you stated the valuation is higher than the first, but how did you come by that number? If you used an online service they can be terribly wrong. Call a couple of real estate agents and ask for a comparable market analysis. Your homes value may be much lower than you think it is.

With only 8 years left to pay on your first mortgage, this may be the way to tackle the issue you are now facing (payments higher than you can afford, and an underwater home.)

[tcreegan]

modify now

Hi Dtimo,

The time frame is kinda tight, but if you can get the loan mod done b4 filing you leave open the option "retain and pay"

Basically you ink a new contract. Tell the lender you are filing BK7 but plan on staying current and staying in the house. As long as you keep current w/ the payments and other loan obligations (insurance taxes, etc) you will not be in default and the lender cannot repossess or foreclose.

You like this b/c you are not legally liable for the debt. You can walk away later when things get worse or you find a better deal.

Lenders don't like this b/c you are not legally liable for the debt. When you tell your lender you plan to stay current on the loan through a Ch 7 BK, did the lender just shrug their shoulders or have a mild heart attack?

As for the loan modification in the BK; you sign a new contract and either your lawyer signs off on it (most good lawyers won't) or a judge approves it.
(some judges do, some don't) If approved, you have the BK court blessing on your new contract.

Which is really no different from signing a new contract outside the scope of the BK. After discharge, sign the loan mod, same consequences as reaffirming in the BK.

No the court cannot force you to convert form a 7 to a 13 b/c a loan company offers a modification. Modifications/reaffirmations are strictly voluntary, both for you and the lender.

Before you reaffirm a debt in BK, get a impartial financial adviser to look it over. In your case I see that you are trying to pay 291,000 over 30yrs for a house worth 188,000 Doesn't make sense financially.

Best to you in all this,

Tom in Colo

[SMinGA]

Not necessarily.

If you're modifying an already discharged loan, it is NOT the same as a refinance. (Refinance = new loan, modification = change terms of original loan.) There actually should be verbage to the effect that the modification will not change any bankruptcy proceedings.

As for the loan modification in the BK; you sign a new contract and either your lawyer signs off on it (most good lawyers won't) or a judge approves it.
(some judges do, some don't) If approved, you have the BK court blessing on your new contract.

I'm guessing the situation here is: the current high mortgage payment helps the OP to qualify for a ch. 7, but for the long term they want the payment reduced. It is a good idea though to investigate the true value of the property to see if you are upside down on the 1st. If it really is close, and you're past due on the mortgage now - see about modifying to include missed payments in the principal. Might raise the principal just enough to get the 1st upside down so that a ch. 13 can strip the 2nd.