help me! 341 meeting Dilema

[scs30885]

Hi all

I am stuck in a tough spot and need your advice.

I surrendered 2 of my properties in chapter 7. After the CH 7 discharge, I then filed CH 13 to do a lien strip and keep my pricipal residence. I let my brother live in other property. He is disabled and I told him he could stay there until the bank foreclosues.

My attorney said I could defend the foreclosure for as long as I can until the bank forecloses. So this is what I am currently doing.

I have my CH 13 341 meeting on tuesday and I am worried the trustee will not like how this looks.

I am basically living in one property (principal residence) to do a lien strip through chapter 13, while at the same time defending a foreclosure for the other property where my brother lives.

How will this look to a trustee and what questions do you think he will ask me about this scenario.

[biotechsolution]

Well first thing if if you filed your Chapter and received a discharge in the last 8 years you not eligible for a lien strip through a Chapter 13. You cannot receive a Chapter 13 discharge within 4 years of receiving a Chapter 7 discharge. Years ago before the 2005 law change this was common practice a "chapter 20", now it cant' be done. You can file a Chapter 13 to catch on arrears or other priority debt since your Chapter 13 plan is going to have to be a 100% payback plan. Meaning you have to pay your 2nd mortgage in full during your plan.

Sorry to say but you need a better attorney.

[chrisdfw]

Well first thing if if you filed your Chapter and received a discharge in the last 8 years you not eligible for a lien strip through a Chapter 13. You cannot receive a Chapter 13 discharge within 4 years of receiving a Chapter 7 discharge. Years ago before the 2005 law change this was common practice a "chapter 20", now it cant' be done. You can file a Chapter 13 to catch on arrears or other priority debt since your Chapter 13 plan is going to have to be a 100% payback plan. Meaning you have to pay your 2nd mortgage in full during your plan.

Sorry to say but you need a better attorney.

Can't a chapter 13 plan run 5 years? which would make it beyond the 4 years? I don't know but for reference i would like to know... thanks.

[biotechsolution]

You have to wait the 4 years to 'file' a chapter 13, not the 'discharge'.

[HHM]

First, the trustee could care less about the mortgage. The issue the trustee will have is you plan payment, what you are doing in the plan? If there is no payment to anyone, and you are just filing to stop a foreclosure; the trustee WILL move to dismiss the case.

Biotech is right...generally, you cannot strip a lien in a chapter 13 case that cannot receive a discharge. The problem is section 1322(a)(2). For whatever reason, most courts hold that in order to strip a lien on a primary residence (modify the rights of holders of a secured claims), the chapter 13 case must be eligible for discharge (personally, I think this reasoning is faulty because the loan was already discharged in a prior chapter 7, but unfortunately, the majority rule is, no lien strip in non-dischargeable chapter 13.

HOWEVER, if the property in question is not YOUR primary residence, you MAY still be able to do a cram down in a non-dischargeable 13. (but I don't know for sure--if you cannot lien strip in a 13, then the same reasoning would seem to apply that you cannot do a cram down).

[despritfreya]

OP can file a Chapter 13 on the heals of a 7. There is nothing in the Code that precludes such a filing. What OP cannot do (nor does he need it) is obtain a Chapter 13 Discharge. And, no, you cannot hang out in the 13 for 5 years and then get a discharge since the time period runs from the entry of the 7 discharge to the filing date of the 13.

As it relates to the lien strips, I believe some Judges in Florida have held that you cannot do a lien strip in the context of a "Chapter 20" (7+13) holding that a lien strip is only available with the entry of a Discharge under Section 1328. Since there will not be a discharge under 1328 you can't strip the lien.

While I do not practice in Florida, I can tell you that I have been having some success with lien strips in the context of the "Chapter 20" in my jurisdiction. However, in none of the cases I have handled did I have any opposition. While there are no reported cases where I am, the vast majority of the reported cases I have found deny a debtor the ability to do the lien strip after obtaining a 7 Discharge. Some Judges use the above approach while others find different reasoning to say "no". Based upon the decisions, even in the cases I handle, I believe that the avenue of doing the lien strip in the subsequently filed 13 will eventually close.

Des.

[despritfreya]

HOWEVER, if the property in question is not YOUR primary residence, you MAY still be able to do a cram down in a non-dischargeable 13. (but I don't know for sure--if you cannot lien strip in a 13, then the same reasoning would seem to apply that you cannot do a cram down).

The problem with the cram down is that you must pay off the secured claim within the 5 years. Even if you propose a balloon in month 60 (majority of cases say "no" to this) how is one going to refinance to make the payment? I doubt that there will be enough equity in the property to secure financing. Now, maybe one could do a Chapter 11 and do a Plan that is far in excess of 5 years but. . .

Trying to hold onto such property would seem to be a lost cause.

Des.