House foreclosing - secured becoming unsecured??

[becky20]

So we filed July 2008. Originally planned to keep our house, were several months in arrears and the arrears was going to be paid in the plan. We've since decided to let the house go and have moved out. Bank is moving forward with doing what they need to do to foreclose. Once that happens, what happens to the 2nd mortgage and the arrears amount that was going to be paid in the plan? Once the foreclosure happens are those wiped out, or are they just moved to unsecured (which means if we're in a 100% payback that we'd still have to pay even though they foreclosed)?

[rrockinggramma]

Well everything should be unsecured debt. However the mortgage company will have to file an amended claim etc so I would be asking the trustee and the court if the mortgage company can amend its claim?

[lrprn]

So we filed July 2008. Originally planned to keep our house, were several months in arrears and the arrears was going to be paid in the plan. We've since decided to let the house go and have moved out.

A few questions first....

Did you discuss letting the house go with your lawyer before you did it, and then your lawyer informed your trustee so your trustee is aware of your decision to now surrender the house?

Has your lender petitioned the court yet to lift your automatic stay so they can repossess the house, or are they just talking about doing it?

Did your first and your second mortgage lenders both file claims to be included in your 13?

Typically if you surrender the house during your active 13, then the amounts remaining on your first and second mortgage will be wiped out at discharge. However, do have a talk with your lawyer to find out if surrendering the home is going to significantly increase your disposable income - this could increase your monthly payments if you have to file an amended plan.

[dp0127]

Re:

Hi, if you are considering your house go, then convert your chapter 13 to a chapter 7 so you will get discharge on all unsecured debt, amend your schedules and file a "Statement of Intentions (Form)" and surrender the property, the lender will have to file a Motion for Relief from the Automatic Stay so they can sell your property, once your property is sold then you dont have to worry about property taxes or the lender (1st Mortgage) comming back and charging you, on the second mortgage if its your principal residence you probably dont have to pay nothing back, (It depends on what state you live) but the second lender can file a loss in their taxes and give you a 1099 at the end of the year and the IRS could take it as if you have that as an income. But talk to a lawyer first.

I am not a lawyer, any of this information cant be taken as legal advice, please consult with a lawyer before making a decision. Thanks.