Chapter 13 and my house

[dego2274]

The lady who is working on my case is on vacation this week and I have a question about my BK. The receptionist didn't know and my attorney was out a lot this week. I filed a chapter 13 and kept my mortgage. The 2nd mortgage is being stripped so I won't be paying that. I was advised to be carefull not getting behind or late on a house payment because it could screw up my chapter 13 and throw it out. How and why is that?? or is this true? I didn't file on the house so I dont' understand how it's connected with my BK unless it's because I stripped the 2nd mortgage. Also if I were to find myself in a bad situation again (ex.. job loss), can I convert my 13 into a 7 and still keep the house. My 2nd mortgage that was stripped was thru the same lender I have my 1st mortgage with. Thanks ..

[Pandora]

Your 2nd is stripped until discharge - so you have to complete your plan for it to actually have the lien avoided.

I believe maybe what your lawyer is suggesting that if you fall behind on your 1st mortgage and you're trying to pay your plan payment, then your plan wasnt feasible to begin with and shouldn't have been approved. It could also be because your 1st and 2nd are with the same lender which in that case, even though they arent included in BK, they may be able to prove you are defaulting on the 1st, therefore request the strip for the 2nd be denied through default.

You can convert to a 7, yes - there are several links on the forum that address that issue specifically you may want to read.

[dego2274]

Thanks for the info. The 2nd mortgage is with the same lender and I was advised that this can cause problems or should I say be more difficult. If I couldn't pay everything and wanted to convert to a 7, I would have to catch up that 2nd mortgage right? I need to ask my attorney more questions, I have been busy and to be honest just failed to ask due to the stress this process is causing me. Never wanted to do this, it was the only way to fix my job loss and income cut to keep my house. Thanks again for the info.

[HHM]

Your mortgage is included in your BK regardless. As a practical matter, your day to day experience with your 1st mortgage does not change in your BK, but it is a debt, and it is included in your BK. Once you receive your discharge, you will, actually, discharge your personally liability on the mortgage loan. However, the lien still survives (for the 1st mortgage), so to keep the house, you must keep making your 1st mortgage payment.

You really should focus on the here and now and not play what if scenarios; this is one of those times where the phrase "cross that bridge when you get to it" is apt. Unless a big change is immanent, don't worry about it. Just make your payment.

The chapter 13 plan is like a contract. One of the provisions is that you will continue to pay your 1st mortgage payment outside the plan. If you fail to do so, you have breached both the mortgage loan (allowing the bank to foreclose), and you have defaulted the chapter 13 plan with regard to the mortgage. However, there are options if things change. But odds are, if you fall behind on the mortgage during an active 13, you will probably lose the house.

[SMinGA]

If you eventually need to convert - you would possibly need to give up the house. The lien avoidance/lien strip on the 2nd will only be finalized if you complete the ch. 13 plan. So if you convert, the lien is in full force and you owe the full balance on the 2nd. The 2nd would be able to pursue foreclosure against you (after the 7 was completed). Whether or not they would actually do so - well that is anyone's guess. Since you have the same lender on your 1st & 2nd, they would have nothing to lose...