Questions on Ststement of Income and Plan

[Torra]

I am filing Chapter 13 myself, (I can not afford and attorney), with the help of the Nolo book. I am desperately trying to save my home. I am going to be 60 this year and if I lose this home I will never have another.

Can anyone help me with ideas on qualifying for a 13 when I should be filing 7? Here is my situation. I had a business that because of various challenges I had to close a hear and a half ago. Consequently I have had a drastic loss of income. I have been trying to modify my mortgage for a year now without success. I am pretty sure that the B of A will, sooner or later, foreclose on my home. One of my clients is a realtor and she is working with lenders selling distressed properties. I am getting the impression that this is what the banks would prefer rather than give loan modifications. As she says, we are all just numbers - they don't care whether we have homes or not. I think the B of A is starting first with the homes people will walk away from, and then will move on to dealing with those who will be "difficult" to move out.

I am doing everything I can to bring in income. I currently rent rooms in my home, still have a few clients during the day I see in my home as well as working a second job in the evenings.

The Statement of Current Monthly Income is a average of the last six months of income, but this income is less than what I am currently making a month. I have a Mortgage Modification trial payment amount from the B of A that is $600 more a month than it should be, based on my income, and I haven't been able to get them to correct it. I did get an estimate from one department that was the correct amount. The B of A has verified my income correctly back in December, but has not corrected the modification payment. This verification does not seem to be in the computer that is accessed when you call. I know that the six month average income and the modification payment I currently have goes on this Statement. I would not qualify for a 13 on this form with these figures.

When I do my plan, how do use my current monthly income and communicate this to the court and how do I use the correct modified loan amount on the plan? I will not qualify for a 13 if I use the trial payment that I currently have. I need to negotiate this payment in the bankruptcy. I also have to cram down my second. My property is currently worth $30,000 less than the first mortgage. I have written my own Loan Modification proposal and faxed it to three different offices at B of A. Needless to say, no one has responded to me. I want to include this proposal in my plan to the court. How does one create a plan based on working out a loan modification?

If the bank doesn't start working with me I will have to file a seven and walk away from my home. I can not keep my home with the second and with out a loan modification. I can not wait any longer to file. This year has been very stressful and I have creditors that are pushing me to get protection in bankruptcy. I can not have my little pitiful pay check garnished. I can not put any money in my bank because I am afraid that someone will attach it. I am hiding the little money I have in my home and paying all my bills with cash.

I still have a 19 year old son at home, dogs and cats are also a part of my family. I have worked all my life to have a home where I can enjoy my family and pets and yard, I do not want to give up my life, which my home is. Even though staying in my home may not be easy or smart, it is what I want to do. I have no where else to go. I need help!

[SMinGA]

First - I am not an attorney and it would be good to consult multiple attorneys even if filing pro se. (Take advantage of free consultations.)

Other than that, I have never heard of anyone modifying a mortgage as part of a bankruptcy case. Stripping a 2nd and converting it to unsecured debt is probably something requiring an attorney though.

[justbroke]

I just saw, last week, in USAToday where Bank of America was going to allow cram downs of principal on primary residence mortgages! Maybe that would help.

Anyhow, a Chapter 13 with your specific criteria and your state of affairs should be done by an attorney. Your income is irregular and you are having issues with your bank and your mortgage. Also, you're trying to deal with a modification inside a Chapter 13 by writing it in the plan... that will never happen. The Chapter 13 code doesn't allow you to modify a primary residence mortgage (11 USC 1322). This is why I highly suggest you seek an attorney.

If you're going it alone, you need to first find out if your bank (BofA) will allow you to put in a formal HAMP or National Homeownership Retention Program (NHRP) prior to filing and that the filing will not interrupt or stop the HAMP/NHRP modification. Then you need to be very diligent in pursuing the HAMP/NHRP and actually author a confirmable and feasible Chapter 13 plan.

Please know that less than 40% of all Chapter 13s make it to confirmation. That's why if you really want this Chapter 13, you need to rethink the going it alone route. Your best bet may be a modification under HAMP/NHRP and filing Chapter 7. I don't see how you can get a confirmable Chapter 13 plan and save everything that you want to save. Also, if your home is worth less than $300K, then without the principal reduction, your home isn't worth saving. My guideline is 10% or more underwater you need to really think about it from a financial standpoint including, but not limited to appreciation rate and other costs (insurance, taxes) which I like to call the Total Cost of Ownership (TCO). Your TCO may be much worse than renting and you'd be getting nowhere. That's why a financial analysis is very important.

[Torra]

Thank you for your reply. I began a loan modification, and am in a workout program, with the B of A that should have been completed last August. I want them to finish it, correctly, in the Chapter 13. My income was verified back in December. I realize the court can't modify my mortgage but perhaps the bank would complete my modification in the creditor meetings. I did see that a judge did bring the mortgage company into court for one debtor on a web site that has an article called "Loan Modification Hell". I do have all my documents from the Loan Modification and the correct modification payment calculated. I can not get anywhere with the bank. I understand that I can give them a release to speak with me and complete this program in a bankruptcy. I am actually hoping that the bankruptcy may get the bank to move forward with the modification.