what happens if you are late

[waitinggame]

We are going to file on Monday, and currently are late on 1st and 2nd mortgage. (1 month behind on both). Will it be an option to delay making those payments now and add them after the Chapter 13 is done? The house is not included in my plan as it is now. Payments now are made outside the plan along with a car payment which is current.

Thanks for any help.

[Flamingo]

You need to ask your attorney. Your circumstances have changed since you initially submitted your paperwork to him/her.

[SMinGA]

Mortgage arrears must be a priority debt, to be repaid in the plan. Some districts require that if there are mortgage arrears, the regular (ongoing) mortgage payment gets made in the plan as well. Some don't.

You need to contact your atty, to have them add the mortgage (both) as priority debt. If you don't do it now, it will have to be done later and will probably delay confirmation. If you file now, the next regular payment on your mortgages is the June 1st payment, so anything outstanding prior is arrears.

[MSbklawyer]

Mortgage arrears must be a priority debt, to be repaid in the plan.

How can mortgage arrears ever be a priority debt? Priority debts are, by definition, always unsecured

[SMinGA]

I said: "Mortgage arrears must be a priority debt, to be repaid in the plan." Translated: mortgage arrears are treated as priority in a ch. 13, and are paid thru the plan.

One cannot go into a ch. 13 with mortgage arrears and not have it paid thru the plan...

My understanding: priority (by definition) debts are paid ahead of general unsecured. Priority debts include taxes, mortgage arrears, any secured items paid in the plan. A plan cannot pay general unsecured debts and leave 'priority debts' unpaid.

You seem to think (perhaps I'm not following you either) that I'm suggesting mortgage arrears is not paid in the plan? Kind of confused by your post.

How can mortgage arrears ever be a priority debt? Priority debts are, by definition, always unsecured

[freeatlast98]

Mortgage & Chapter 7

I haven't filed yet. I plan to file Chapter 7 in August or so.
I have been speaking to BofA to try and modify my mortgage.
I never go past 30 days in paying so technically, I'm not late.
I have been told because I don't qualify for the traditional modification, the only way they'll consider an "in-house" modification is after I'm Late. I'm so confused about what to do because I don't want to mess up my pending Chapter 7.
I would like not to send the May payment and see if they'll work with me. Any suggestions??

[MSbklawyer]

I said: "Mortgage arrears must be a priority debt, to be repaid in the plan." Translated: mortgage arrears are treated as priority in a ch. 13, and are paid thru the plan.

One cannot go into a ch. 13 with mortgage arrears and not have it paid thru the plan...

My understanding: priority (by definition) debts are paid ahead of general unsecured. Priority debts include taxes, mortgage arrears, any secured items paid in the plan. A plan cannot pay general unsecured debts and leave 'priority debts' unpaid.

You seem to think (perhaps I'm not following you either) that I'm suggesting mortgage arrears is not paid in the plan? Kind of confused by your post.

unsecured:

First: Domestic support obligations;

Second: Administrative expenses;

Third: Ordinary course business expenses in involuntary cases;

Fourth: Unpaid wages;

Fifth: Payments to employee benefit plans;

Sixth: Certain farmer / fisherman claims;

Seventh: Prepaid consumer purchases;

Eighth: Certain taxes;

Nithth: Certain FDIC obligations;

Tenth: Claims arising out of DUI personal injuries.

Mortgage arrears are paid ahead of unsecured debts in the bankruptcy plan not because they are priority debts; they get paid first in the bankruptcy plan because they are secured debts.

[SMinGA]

I see your dilemma... If you're late when you file, that can be a problem. But you almost need to be late to modify.

What about set that $ aside for May & June payments. Try to talk to them again but if nothing happens on the mod you would have the money to bring your mortgage current?

I haven't filed yet. I plan to file Chapter 7 in August or so.
I have been speaking to BofA to try and modify my mortgage.
I never go past 30 days in paying so technically, I'm not late.
I have been told because I don't qualify for the traditional modification, the only way they'll consider an "in-house" modification is after I'm Late. I'm so confused about what to do because I don't want to mess up my pending Chapter 7.
I would like not to send the May payment and see if they'll work with me. Any suggestions??

[SMinGA]

Thanks for explaining... I was not aware that mortgage arrears did not technically get classified as a 'priority debt'.

"Priority Debt" has a specific, technical meaning in the bankruptcy code. That's where the confusion is coming from, I think. You are using the word "priority" in the everyday sense and I am reading it in the technical sense.

[waitinggame]

My mortgage too is will BofA. They told me the same thing - I need to be at least 3 months behind before they will help. Right now, I am late with May's payment (it will be on the 1st). If I pay that in June, June's will be late. It will go on like that .... Anyway, when I file, what exactly will they do if I am late with say at least one payment? At this point, they aren't willing to do anything.

I have talked with the paralegal - she said to now wait until June to file and include any past due payments in the plan.

If I don't pay Mays payment in June, and file in June, will both payments be included - and then I can start becoming current?

One other thing. BofA called the day after I was late (1st time ever being late). That's scary.

[waitinggame]

One more question

If I do include late payments in Chapter 13 plan - (2 different banks) - will they put a lien on the property?

[krielly]

You have a mortgage (s), so there is already a lien on your property......
Guess I'm not sure what you are asking??

[newbie2]

If I do include late payments in Chapter 13 plan - (2 different banks) - will they put a lien on the property?

There is already a lien (or two) on the property. The lien was placed when you signed the mortgage. If you are asking if the bank can start foreclosure proceedings the answer would be no - if you include the back payments in your Chapter 13 plan then the bank will not foreclose.

[SMinGA]

Including arrears in a ch. 13 is very common. The arrears get paid back thru the plan, and depending on how your district handles it you'll either make ongoing payments directly to your mortgage (on time) or they will be part of your plan payment also. As long as you make your plan payment as agreed, and your mortgage payments after filing (if not part of your plan payment) on time you'll be fine.

As to whether or not the mortgage company will work with you to modify? That is kind of hard to answer. I am at the moment working with BofA on an inhouse mod. Hopefully will know soon how it goes. Got a call from my negotiator last week to say they couldn't do anything due to my expenses exceeding income - but they were calculating my net income on my 2nd job wrong. So now I'm waiting again...

For reference, I am more than 1 month behind... Trying to get a mortgage mod and resolve transportation before I refile. If the mod falls thru, we'll be ok - but it will be the difference of 60 months or 36. (We're below median, but with current mortgage payment would not have enough DMI to resolve arrears, etc. in 36 months.)

[daglo]

There is already a lien (or two) on the property. The lien was placed when you signed the mortgage. If you are asking if the bank can start foreclosure proceedings the answer would be no - if you include the back payments in your Chapter 13 plan then the bank will not foreclose.

What happens if you have a second mortgage that is 4 months late, but your house is underwater by 250,000? The first mortgage is more than the house is worth, so can the second by "stripped" even if we are late?