Filed Chapter 13...now want to foreclose

[wfjd6030]

My family and I live in California (northern). Bought a house 3 years ago with a 5/1. Finally the financial burden of EVERYTHING came tumbling down, and my DH and I decided to file for BK this year in Feb - didn't pass means test, so 13 was what we got. We initially didn't want to include the home, but now it's becoming more of a reality because of our 5/1 (which will reset in Dec 2009). We just don't see the light at the end of the tunnel!

We want to walk out, but we haven't gotten discharged YET...been waiting - our judge that was assigned to our case...well since the new laws, this is the first he has had. So it's taking FOREVER!!! FYI - we haven't defaulted on our mortgage yet...(actually, we did about 8 months ago, and that amount is included in our BK, whereas before our filing we were under a 18 month repayment program that upped our mtg $400/month).

With all this time to contemplate, I want to know from others if 1) we CAN include our home now while we're in the middle of our case; 2) wait until we default (AGAIN); 3) can we walk away...what are our options, and what is the best option!

Thanks in advance for your feedback!

[JollyGG]

my DH and I decided to file for BK this year in Feb - didn't pass means test, so 13 was what we got.
We want to walk out, but we haven't gotten discharged YET...been waiting - our judge that was assigned to our case...well since the new laws, this is the first he has had. So it's taking FOREVER!!!!

I'm confused. Did you mean you aren't confirmed yet?

[wfjd6030]

Sorry...I'm not sure about the language used in BK. We filed in Feb 2007, had our 341 hearing in May 2007, had 3 objections since then, and now my case is sitting on the judges desk waiting for...I don't know the correct word...confirmation, discharge, whatever it is when the judge approves our case. We have been paying the Trustee since March 2007, but we haven't gotten "confirmed" whether we have been "approved". Does that make sense?

...Just looked it up...yes, CONFIRMED. We haven't gotten CONFIRMATION yet.

[lrprn]

...Just looked it up...yes, CONFIRMED. We haven't gotten CONFIRMATION yet.

It's normal to not be confirmed for awhile when you are dealing with objections (see my sig - we've been waiting for 15 months while our experienced trustee and lawyer wrangle over the two remaining objections to our case).

What are the objections to your case? Were they filed by creditors or by your trustee?

If you are still in an active 13, you can ask your lawyer to amend your Ch 13 plan to surrender the house. I don't know how this will impact your case - were you under the CA income median for your family size or above it when you filed?

[klux]

lrprn - if you don't mind sharing, what are your two objections? Have distributions been made throughout this time or is all the money in the trustee's hand? Do you have a mortgage?

[wfjd6030]

In responding to lrprn, the objections were from the creditor, not the trustee. In speaking with the Trustee's assistant (I call them once a week to get status...they don't sound irritated by me yet, I think they understand), she said that the Judge sees both sides (my attorney and the creditor's statements), and that this is the first case he has to rule on since the new laws. The creditor was arguing that I can afford more towards my payment (my plan originally was for $300/month). Basically they wanted more money. As mentioned, before filing we were/are in a repayment program I negotiated myself to save my house ($400 extra a month for 18 months), which my atty ended up adding onto the $300/month. So I pay the trustee $700 month since June 2007. It's with the trustee, none have been distributed yet.

We are above the income median for a family of 3 in CA. The mortgage is and will eat us alive once it resets. If I have the atty amend my case, wouldn't that increase my monthly payment to the trustee - surely it will. My mtg won't reset until Dec 2009. Should I wait it out, or should I surrender now. I probably won't be able to refi because of the BK, I'm upside down on the home already. I'm reading the market won't be picking up at least around end of 2009. But I'm already negative equity right now...I really don't know what to do... Thanks a bunch for your suggestions.

[wfjd6030]

Filed Chapter 13...but now want to foreclose

Can someone help me with my suggestions on my earlier post. Please read whole thread.

Thanks.

[klux]

I would think you could motify your plan to account for the surrender of your house. That's just my opinion.

[lrprn]

lrprn - if you don't mind sharing, what are your two objections? Have distributions been made throughout this time or is all the money in the trustee's hand? Do you have a mortgage?

After we filed, within a month we had three objections - one from our mortgage company stating we were in arrears when we filed, and two from our trustee.

One of our trustee's objections was around the infamous Means Test vs. Schedule I&J disposable income mismatch - lots of cases fighting this out in the bk courts over the last year. The other objection was because we were paying back my husband's six loans taken out of his retirement account and also contributing to our retirements which totalled put us over the 10% of income limit allowed by the bk court for retirement contributions in our area.

The mortgage objection is gone - our lawyer forced them into court to prove we were in arrears. We knew we weren't and could prove it with their own paperwork. Their lawyer was a no-show on court day, so the judge threw their objection to the curb

Still wrangling over the two trustee objections as our laywer and the trustee trade briefs and try to work out a compromise behind the scenes. We're the perfect test case for these two issues in our bk court district, so it's taking a long time as the lawyers are presenting all their case law citations and judicial interpretations that favor each side. Worst case scenario - if our judge rules against both objections, our Ch 13 payment will go up $150/month. Time will tell - keep your fingers crossed for good news on our side!

The last 15 months we've been paying our original payment to our trustee every month. Our trustee got permission from our bk judge last October to start distributions to our car lender even though we weren't confirmed yet. That's been happening every month since then.

And yes, we have a mortgage (now objection-free! ) and a HELOC.

[MajorMike]

Irprn, why would they object that you were in arrears? Why would that be a problem?

[lrprn]

Irprn, why would they object that you were in arrears? Why would that be a problem?

We filed Ch 13 stating we were not in arrears. If we really were, then the mortgage company had grounds to show we didn't file "in good faith" and request lifting our automatic stay to start foreclosure proceedings. Luckily our excellent lawyer nipped that little underhanded effort in the bud

[wfjd6030]

Just spoke with our atty. And he advised that we do not include in our "active" BK (since it has not been confirmed yet). He said if we're concerned about the "forgiveness of debt" 1099 that will be coming, he said that we are exempt because we are both insolvent and BK.

Is he right??? Will we not have to pay the taxes on the difference between the auctioned price and the price we purchased it at?

Also, how bad will it be with a foreclosure on our credit report? We will already have the BK on there, but with the foreclosure also?

I guess, we can try to short sell it or do a deed in lieu, but we did already try to short sell it, and the market here is so saturated that there's too much competition. We've had it on the market twice, 6 months each - and not even a bite!

[truckerswife]

lrprn, if we included past due mortgage payments than we should be fine? We got a Notice of Appearance in the mail yesterday from Countrywides attorney. Does that mean he is going to show up at the 341 meeting? I got a statement from them for Octobers payment that showed our regular monthly payment. We pay taxes through our mortgage. So they upped our mortgage payment by $60 a month for the taxes (we originally had a reserve). Could he be showing up to tell the trustee that, or should we be worried. I just mailed Octobers payment.

[wfjd6030]

I had gone to my atty with your suggestions in mind about adding our home into our BK filing - which has not been confirmed yet. He said we don't have to worry, and NOT to include the home. I was worried about paying the "forgiveness of debt" tax, but he said that shouldn't be an issue because we qualify as being insolvent and are in BK. Is that correct?

Or is he not wanting me to mess things up for HIM - since he got our monthly so low and if we give up the house he would have to work on an amendment for us. I don't know what is right?

If we leave things the way it is, we will eventually foreclose because we are upside down on our house right now, although we have 2 more years until it resets. I suppose anything can happen in 2 years, but I've been reading that the housing market will get work in 2008, and we'll start to see it leveling out at end of 2009, which is the time my mortgage resets.

Help!!!

[Bandit]

Help!!!

From reading everything, are you basicaly saying that you wish you could just let everything go now that you are already into the 13? But your attorney says not to do that?

With all this time to contemplate, I want to know from others if 1) we CAN include our home now while we're in the middle of our case; 2) wait until we default (AGAIN); 3) can we walk away...what are our options, and what is the best option!

I do not know the best option but I do know that My Grandma DID end up walking away from the whole mess she got into a 13 and got is switched to a 7 by letting her house foreclose. This was a little different though...she is 90 years old and there was just no way she was going to be able to make house payments, understand and keep track of all of it.

Or is he not wanting me to mess things up for HIM - since he got our monthly so low and if we give up the house he would have to work on an amendment for us. I don't know what is right?

Usually a 13 is a good thing, but sometimes they get it all screwed up in the beginning then you go round in circles trying to figure out what happened. Sometimes people do get an attorney who does not know what he is doing & does not explain it well... as that seems to be a concern. (?)

I have never been in a BK, just learning & I wish I could figure this out for you. Stick around though and keep asking questions until it ALL makes sense. Be patient. There are some awesome people here. Maybe with a few more heads looking at all this from different angles you will be able to figure out for sure what is going to be best to do.

Filed Chapter 13...but now want to foreclose

Can someone help me with my suggestions on my earlier post. Please read whole thread.

Thanks.

I can't say because it is confusing to me but I will keep checking back on this one. Listen to lrprn & some of the oldtimers. Also look at some of the other problems/situations as I found that by doing that I was able to figure out my own problems and what was going to be best for me. Don't get too frustrated. Yours has gotten a little complicated & it is difficult for someone to say for sure about anything or everything so soon. So give this one more time, several days to work on.

You will get it figured out.