Can you give up your house during an active 13?

[chloe0724]

Things are not going so well in our home and divorce may be a possibility. If that happens, I can't afford the mortgage on my own. Since the mortgage is being paid outside of my plan, am I still able to walk away from it and not be responsible for the difference?

Only my second mortgage holder filed a claim. I am current on both.

[HHM]

You can still walk away. However, to not be responsible for the difference, you ultimately need to receive the discharge of your BK.

The bigger issue is what to do about your chapter 13? Can you continue to make the payments, if you did divorce, would you then qualify for a chapter 7?

[chloe0724]

If I didn't have the mortgage payment, I could easily make my trustee payments. So if I made it through the 5 years, then the house would be discharged?

[HHM]

If I didn't have the mortgage payment, I could easily make my trustee payments. So if I made it through the 5 years, then the house would be discharged?

Correct.

At this point, you should probably get in touch with your lawyer and review your options if you do get divorced.

[atolar]

we are going through this. we filed 13 thinking I would have a job by now, but I haven't found anything, so our house is in foreclosure. as long as we stay true with our bk, they can't come after us for the difference. we have a court date for the judge to lift the "relief of stay". we do not plan on attending. I'm jsut ready for it to be over.

[brokeinfl]

Sorry for the newbie question, but paying the difference in what?

[HHM]

Sorry for the newbie question, but paying the difference in what?

In today's real estate market, most houses have negative equity. Meaning that when a house goes to foreclosure, the bank does not receive anywhere near what is owed them. That "difference" is called a deficiency balance and becomes an unsecured debt to the borrower.

[njguy1972]

you probably can do a short sale on your house. If you are in bankruptcy they will probably let you do it because they know you cannot easily get a new loan.

[HHM]

you probably can do a short sale on your house. If you are in bankruptcy they will probably let you do it because they know you cannot easily get a new loan.

Yeah, but why; there is no benefit to the seller of doing the short sale; and as for credit reporting a short sale and foreclosure are equally negative.

But let's not hijack this thread to discuss that, we have plenty of threads that discuss the pros and cons of a short sale (mostly cons because there is no pro side to teh story )

[brokeinfl]

Thanks! I'm guessing that is an appraised value. Maybe a good idea to know where you stand on this before filing, in case things go bad?

[gregorino]

Clarification Please

OK...Chloe said that the mortgage was outside the repayment plan. So, if the bank forecloses and is stuck with the "difference", how would that unsecured amount get into the plan so it could be discharged upon successful completion of the plan?
Would the plan be modified to accept this new unsecured creditor?

[filingin08]

I'm confused.

Our mortgage is outside our plan. Arrears are inside. Our atty told us we could NOT change our minds re the house in the middle of our BK13. We had to decide before filing to keep or not. If we changed our minds mid-way, we would have to dismiss and refile.

[gregorino]

the difference is the question

Our mortgage is outside our plan. Arrears are inside. Our atty told us we could NOT change our minds re the house in the middle of our BK13. We had to decide before filing to keep or not. If we changed our minds mid-way, we would have to dismiss and refile.

It would not be possible to put the difference between what the bank has for a balance on the loan and what it's sold for in a foreclosure into the plan as this was not known at the time the plan was confirmed. Chloe says that their attorney said they could walk away and I think our friendly moderator concurred.
So, if the mortgage is approved to be paid outside the plan and then the house forecloses, how exactly, procedurally (pro se wants to know!) does this "difference" get discharged?

[becky20]

We are also in an active 13 and originally planned to keep the house but are now thinking we will let the bank foreclose as well. My atty said it would not be a problem.

[filingin08]

Not meaning to hijack the thread.

I understand about the difference; however, it seems that given the same situation - mortgage paid outside, arrears inside - we have two separate answers from attys:

1) Yes, it can be done in the middle of a 13. No problems.

2) No, it cannot be done. Otherwise, dismiss and start over.

Is this a matter of law or district? Attorney intrepretation?