13 to 7 to foreclosure...help!

[MLZC-PA]

My husband filed for Chapter 13 in 2002. Our obligation to the plan was fulfilled in 2005, thus we stopped sending money to the trustee. We expected to get a letter and return to a 'normal' bill paying life. However, instead of closing the plan and paying the last secured creditor the trustee continued to make partial payments to the secured creditors (mortgage) We started to make payments for the differences and were told by the mortgage bank not to make any payments to them until the bankruptcy had been discharged. The trustee was still making a payment to them in Sept 2007 (of a whole $36 and some cents) Our attorney reiterated that we should not be making payments to anyone the trustee was supposed to be paying. We recieved no notification from anyone to do otherwise, including the bank.

Because my husband's last secured creditor was not paid in full his attorney converted the Chapter 13 to a Chapter7 to discharge that debt. As a direct result of this our mortgage bank filed a motion for relief (because the partial payments from the trustee had nowhere near covered our mortgage obligation, thus we we are again severely in arrears) beginning foreclosure proceedings.

I do not want to lose my home! We are 16 years into this mortgage, thus have much equity. Instead of the Chapter 13 giving us a fresh start we are in worse shape now than when we originally filed!

What is my recourse? I am trying to work with the bank, rather unsuccessfully (they say because of the bankruptcy and timing problems) The attorney is not returning my calls or emails. I am hopping mad and feeling stupid for only doing what I was told to do. Any suggestions?

[SinkingFast]

A Redemption Loan??!!

Typically associated with autos, there's a provision of the Code that allows for Loans to Redeem Secured property. So it's not exclusively for cars. A Redemption Loan allows you to Redeem the property.

The Redemption Lender, and/or your attny, would negotiate with your current mortgage Lender on an acceptable settlement price. The Redemption Loan Lender would pay off your current mortgage and you'd begin making payments to the Redemption Loan Lender.

There are several companies that specialize in 722 Redemption Loans. Your attny will have to hook you up as these companies typically don't come on board without attny approval. AND, the Trustee is gonna have to agree as well. The payments will have to be structured so as to not pose and undue financial burden on you.

If you have excess equity in the house you cannot protect with your Homestead Exemption, you may have to go this route anyway. Because, most likely, the Trustee will see $$$$ signs and go after the excess equity "for the benefit of your Creditors".

[BKOnce]

This is weird. I though the word "Trustee" implies that we totally trust him by putting our case in his hands and he taking care of everything, and now this "under-payment" surprise? ...

[MLZC-PA]

Yeah, and an attorney has a fiduciary responsibility to his client. His only comment about the trustee was "She should have." I 'should have' just made the monthly payments to the bank all along instead of listening to them.

Re the 722 Redemption: with a value of 167k and a loan balance of 60k could this be considered?

Wouldn't you think the bank would simply recast the loan (tacking the arrears on the end)?

[SinkingFast]

That may be possible, but,............ You have to remember you are in an Open and Active BK. It may be totally up to the Lender. The Lender's hands may be tied by the Law. I don't know all the intricacies of the "What If's", but there may be many variables.

[MLZC-PA]

I have now been waiting eight hours for the bank and/or attorney to call me back about what can be or is being done about this. Just sitting here with my stomach churning. I was under the impression that time is of the essense. Seems the only one with any sense of urgency is me! How do I get someone to let me in their loop? Or do I give them until 7pm and just go get drunk?

[MLZC-PA]

A week of phone calls and emails later and this is where I am at. The mortgage officer at the bank says that with our current credit scores we should be able to refinance or recast with them, but it has to go through the 'person who has authority' to do that. That person is the one who is supposedly "very ethical" and is assuredly "working on it", but hasn't gotten back to me at all. Hubby finally got hold of his attorney day before yesterday. He says he's trying to work it out and will get back to us. He hasn't. I do have a financer lined up through a banking friend, or I may be able to do a little loan through himself, but have been told by our bank not to connect anyone about anything as it may lower our credit score. A 'new' attorney in the mix tells me she can't help me at all as "you already have an attorney", but that we 'should' be able to stop any motions by becoming current or recasting the loan, which 'should' be done through our attorney. Meanwhile we get a motion setting response and hearing dates (Feb 6) for the bank's motion for relief (foreclosure)

I am not in bankruptcy (hubby filed alone) so can I cover the arrears through a loan myself and stop the foreclosure proceedings without all this fuss? If so, shouldn't I be getting that ball rolling?

[bige1030]

If you can refinance the whole loan yourself, that would be a good move to make so that you can take the house completely out of bankruptcy. However, you should talk about that with your husband's attorney because that may create more issues in his case.

[MLZC-PA]

This is just great. Two weeks of waiting for return phone calls etc and here is where I am at. The attorney is still obsessed with the little amount due a creditor, not with us losing our home, and he says converting back to Ch 13 is not an option. The hearing for the bank's motion for relief is Wednesday. The bank will refinance BUT not until we have discharge papers, which aren't expected any time soon. Well, that's what got us into this mess! Circular motions and I'm caught in the whirlpool.