Chapter 13 Mortgage Lien Strips.

[justbroke]

Does anyone know if a payment on a 2nd Mortgage should be included in the Means Test when it is Debtor's inetention to strip it off? It is our hope that including the payment is permitted inorder to greatly reduce the DMI.

It depends on your District. Some Districts are now enforcing the "adequate protection" rules and forcing the Chapter 13 debtor to not only list it on B22C (Means Test), but also to have it on their Plan and make payments! This is just in case it doesn't strip, the lienholder isn't in a worse condition.

As posted earlier, expect the Trustee to come at you to modify the Means Test and/or object to confirmation after the lien strip is completed.

[cspa522]

How long is an appraisal good for/valid? We are going to get an appraisal done to try and strip our 2nd, but I'm not sure exactly when we're going to file. It will certainly be between September and December of this year. I just don't want to have to get it done again (if we have to wait a month or two to file) if I don't have to!

[justbroke]

You need it to be as close to filing as possible. This will just avoid challenges if it is "too dated".

[ABC]

In Data Center my 2nd mortgage shows as:

SECURED - NON-PMSI

Is this correct since I am trying to lien strip it ? I thought it would say UNSECURED .

[LadyInTheRed]

How long is an appraisal good for/valid? We are going to get an appraisal done to try and strip our 2nd, but I'm not sure exactly when we're going to file. It will certainly be between September and December of this year. I just don't want to have to get it done again (if we have to wait a month or two to file) if I don't have to!

If you wait and get an appraisal after you file, you can get an appraisal as of your filing date. Check with your attorney before spending the money on an appraisal. A CMA from a real estate agent may be sufficient. My petition used Zillow.com value and the assessed value which had recently been adjusted downward to reflect the market. I'm so underwater that that was enough. If the lender objected, I then could have gotten an appraisal.

In Data Center my 2nd mortgage shows as:

SECURED - NON-PMSI

Is this correct since I am trying to lien strip it ? I thought it would say UNSECURED .

It's secured until you get an order saying otherwise.

[ABC]

It's secured until you get an order saying otherwise.

I see, because the lien strip is at the end of the 13, it shows this way until that time ?

How long after my 60th payment does that occur ?

[justbroke]

I see, because the lien strip is at the end of the 13, it shows this way until that time ?

How long after my 60th payment does that occur ?

It doesn't automatically "show". In some Districts you or your attorney need to motion for a "recordable" order, indicating that the lien is stripped. This is because some lienholders don't do it. You can also just keep poking the lienholder to record a satisfaction of mortgage, but I think that getting the Judge to issue a recordable order is even better.

This can take some time after the Plan is completed and you receive your discharge. Remember, it's not just you completing your 60th payment. A plan and Chapter 13 doesn't discharge until the Trustee performs an audit and makes sure that you complied with the terms. Usually this takes 3-6 months after you have completed plan payments (to get the discharge and close).

Best wishes.

[LadyInTheRed]

I see, because the lien strip is at the end of the 13, it shows this way until that time ?

As justbroke explained, it's true that the lien is not actually stripped until you are discharged and an order removing the lien is issued by the BK court and then recorded with the county recorder. But that wasn't the point I was trying to make. Data Center showed my 2nd as secured until the order valuing the lien was entered (different than an order stripping the lien that you get after discharge). After the order valuing the lien was entered, the 2nd was changed to unsecured on Data Center.

[ABC]

And when does that order happen ?
I had a full appraisal done by a licensed appraiser so I would have to fight them over CMA or a Zillow.

[LadyInTheRed]

And when does that order happen ?
I had a full appraisal done by a licensed appraiser so I would have to fight them over CMA or a Zillow.

After your attorney files a petition to value the lien and either the notice period expires without objection or after the hearing date. Procedures vary by district. In my district there is only a hearing if the creditor objects. In other districts there is a hearing even if there is no objection. After the notice period/hearing, your attorney submits and order to the court to be signed by the judge. In my district, this all had to be done before the 341.

[lorine]

Chapter 13 and loss of job

My husband is loosing his job. We have been in a Chapter 1 since 5/2008 and pay $2300 per month which is just about how much our income will drop.

What happens if you have 33 months left? Will they lower the payment or what?

[justbroke]

What happens if you have 33 months left? Will they lower the payment or what?

Make sure you inform your attorney. Your payment can be lowered, but not below what's required. At that point, when the payment is too low, your plan becomes infeasible.

You could consider converting to a Chapter 7.

[DaisyLover]

I'm looking for some knowledge about our situation. Our attorneys office is not exactly helpful. We had our attorney file a lien stripping July 1st. The bank has not responded to the filing. There was supposed to be a court date today. I contacted the office to find out what happened and was advised it was rescheduled for 10-19 because the bank has not responded. The secretary said the attorneys office is filing a Motion for Default due to the bank not responding and it is supposed to be taken care of then. However, I was under the impression from the attorneys office told to me around August 5th that today was supposed to be the final response. If the bank didn't respond or fight it, the Court could grant the lien stripping. I thought they had 30 days to respond. Why would they ignore it? what are our chances of it going through? The secretary also said they had 3 scheduled for today and all were rescheduled to next month for no response from the banks. All three different banks. This waiting is freaking me out and not having a helpful attorneys office is not great either.

[NoTomatoCan]

The secretary said the attorneys office is filing a Motion for Default due to the bank not responding and it is supposed to be taken care of then. However, I was under the impression from the attorneys office told to me around August 5th that today was supposed to be the final response. If the bank didn't respond or fight it, the Court could grant the lien stripping.

This is a procedural thing. You have nothing to worry about. It simply sounds like the bank didn't respond so now your attorney needs to submit a Motion for Default to complete the process. This is a good thing for you.

Why would they ignore it? what are our chances of it going through?

Many times banks do not contest lien strips due to the fact they know they have very little chance of winning, so why devote the time and resources into fighting them. Banks see the same news that you and I see. They know that housing prices have fallen everywhere. If your home is deeply underwater, why would they fight a losing battle... Of course others are just so swamped that it may just be policy not to fight them. For many people filing chapter 13, if they are really underwater on their second mortgage and don't get a lien strip, they surrender the home - putting the 2nd mortgage holder in the exact same position they would be in if you got the lien strip. So even if they fought it and won, they still can lose.

Your chances of it going through at this point seem pretty high.

This waiting is freaking me out and not having a helpful attorneys office is not great either.

Take a deep breath! Bankruptcy is a slow, glacial process that works at a speed most people are not accustomed to. The bank not responding is a good thing for you. Just hang tight and you will likely get your lien strip.

[DaisyLover]

Thanks NoTomatoCan. Oddly, today I received an Entry of Default addressed to the bank, returned to us b/c our address was in the return section. It came back as undeliverable to the bank from the Bankruptcy Court. It says Palintiffs requesting entry of default judgement for defendant having failed to plead or otherwise respond to the complaint in this action. The Clerk herby enters the default of Defendant in this action.

First, does this mean they could still fight it, but at the next court date, it will be decided on either way? This letter isn't giving the ok, its all done with?

Second, the fact that it was undeliverable to the bank and returned to us does that mean that because the bank didnt receive it, they haven't been notified and that at the court date this could be prolonged? But, this doesn't have a court date on it so I would assume that they had to have been notified of that also and if it was returned, the court would get that? Im so confused.