New Bankruptcy - I have questions.

[TheFalcon]

Good Morning BKforums, I have a lawyer filing chapter 13 for me (next week really just to save a month from mortgage).

The proposed payments that I will be making are going to help me save money, for me, bankruptcy is the best possible solution to a whole I am in. But I have a few questions from those who are more experienced with the expectations after filing.

a background on why I filed. My wife an I were behind on everything, a few credit cards, mortgage, and utility bills (power,cell,phone,etc). We decided to file because when we called BoA to see if we could get a modification, or some sort of forbearance, they said there was nothing we could do, they were sending intent to accelerate letters just about every 3 weeks. after calling the bank, they said they could not help us. so the next day we went to see a lawyer.

So, In the bankruptcy, i have about $4k (~4 mortgage payments) rolled in. (obviously all my other debts too).

Now the questions (for those who felt the above was tl;dr)
1). My Lawyers paralegal told me that from this point on, there is no more grace period on my mortgage, if the bank does not have the payment on the first of the month, every month, they will essentially file motion the next day. he suggested to send everything by certified mail so that I have proof that i sent it in. Is this standard, or would BoA really care if the payment is made a day late?
My understanding is that, there isn't a problem until a lender files motion..

2) the paralegal told me that if I had to have any additional financing available, to request approval from the trustee, while this is not a problem in general. the question is, if i were to say, switch cell carriers, they would more than likely perform a credit check, would that be something i need to let my trustee know?

3) (and hopefully final ?) Is it possible to have a mortgage re-modification after filing? one of the reasons we started to get behind is that my wifes hours were scaled back at her job, thus decreasing our income. (and this is why it hurt when the bank said we couldn't re-modify) however, since that call with the bank, my wifes hours were scaled back even further. so, in this would we be able to remodify the mortgage for a possible lower interest rate?


any help or expertise would be greatly appreciated.
-TheFalcon

[Pandora]

Hi and welcome

1. "My Lawyers paralegal told me that from this point on, there is no more grace period on my mortgage,...."

Correct - if you owe arrears and include them in your BK, you must be kept current or it the bank can seek a motion to foreclose.

2. "the paralegal told me that if I had to have any additional financing available, to request approval from the trustee,"

yes - you cannot incur any new debt while in a Ch. 13 w/out your Trustee's approval. Now if you want to change cell carriers - its best to do that prior to filing if possible as they do run your credit and you may be required to put a security deposit down. Or - you can look into pre-paid plans. you do not have to let the trustee know if you change carriers, however if it ends up costing you more $ than your org. plan, you will have to figure out how to pay it based off of your monthly budget. Amending your schedules to accomodate a cell phone plan that is higher will generally be frowned upon.

3. "Is it possible to have a mortgage re-modification after filing? "

For a Ch. 13 - it is always recommended to have all mods done prior to filing, that way you lock in the terms prior. I believe it will be very hard to be done afterwards, as its not a guarentee even with completed trial payments. Your plan could be modified I'd imagine, but if you dont get approved for a perm. mod, then you have to add back in all the $ that was basically "forbeared" from the trial payments. Its something to ask your lawyer.

[despritfreya]

I beg to differ with Pandora on two points.

1) The filing of the bk decelerates the mortgage and puts all parties back to where they were as if there was no default. Your post petition mortgage payments are due as provided for in the contract. Most payments are due on the 1st and if not received by the 15th incur a late fee. If that is what your contract provides for (a grace period) then that is what you have. Your lawyer told you differently (as I often do) to scare the crap out of you and to make sure you make each and every payment on time. As to sending the payment "certified mail, return receipt requested" that is a good idea. I do it for my own mortgage. My lender can NEVER claim I am late or failed to make a payment. Document, document, document.

2) You can absolutely go down the path of loan modification while in a 13 and I do not find it harder or easier than doing one outside of bk. The lender will want a letter from your attny giving it permission to discuss the loan with you. No big deal. The lender may also want Ct approval. While not necessary such is also no big deal. The Order Confirming that I use has a boiler plate provision that allows it to serve as a Court Order authorizing a loan modification or refi without further Order of the Court.

As to Pandora's concern over the pre and post petition arrears. . . Not a problem. The initial plan provides for the pre petition arrears and, if the debtor is lucky enough to get the loan modified an amended plan can remove the arrears. As to the post petition arrears that are accumulated during the "trial period", again, as Pandora points out, those can be added to the Plan at a later date since the Code allows you to cure ANY default.

The reality however with loan mods: They take time-as much as more than 1 year-to push through. Less than 2% go through. If the loan is not modified the homeowner usually can't afford the home and walks away. Walking away necessarily moots out the issue of the pre or post petition arrears. The OP has already been turned down once. While there is nothing stopping the OP from trying again, chances are the loan will not be modified and if the OP cannot make the normal monthly payments the OP will walk away.

[Pandora]

I beg to differ with Pandora on two points.

1) The filing of the bk decelerates the mortgage and puts all parties back to where they were as if there was no default. Your post petition mortgage payments are due as provided for in the contract. Most payments are due on the 1st and if not received by the 15th incur a late fee. If that is what your contract provides for (a grace period) then that is what you have. Your lawyer told you differently (as I often do) to scare the crap out of you and to make sure you make each and every payment on time. As to sending the payment "certified mail, return receipt requested" that is a good idea. I do it for my own mortgage. My lender can NEVER claim I am late or failed to make a payment. Document, document, document.

First of all, differing and being incorrect are 2 different things - I believe I stated in my posting that certain things could be done, not that it was impossible to do..... with that out of the way...

as you well know Despirtfeya - MOST mortgage companies allow the grace period, yes - however... - a mortgage company will look for any and all reasons to foreclose and ask for the stay to be lifted once in a BK situation - "grace period" or not. It is best NOT to be late on your mortgage under any circumstance. If you cannot pay it on time every month before the due date - then you really need to look at why you're late (i.e., budget issues, can you really afford to keep it). The OP hires an attorney for a reason - and if he/she feels that attorney is the best for their situation, they should listen to their attorney, hands down.

2) You can absolutely go down the path of loan modification while in a 13 and I do not find it harder or easier than doing one outside of bk. The lender will want a letter from your attny giving it permission to discuss the loan with you. No big deal. The lender may also want Ct approval. While not necessary such is also no big deal. The Order Confirming that I use has a boiler plate provision that allows it to serve as a Court Order authorizing a loan modification or refi without further Order of the Court.

Again, I didnt say it wasnt possible - I said it will be harder to do - per my own attorney. Your experience may differ as you are in another state/district - and you're not my attorney nor the OP's, so what works for you may not work for everyone else's clients, even if you consider it "boiler plate".

As to Pandora's concern over the pre and post petition arrears. . . Not a problem. The initial plan provides for the pre petition arrears and, if the debtor is lucky enough to get the loan modified an amended plan can remove the arrears. As to the post petition arrears that are accumulated during the "trial period", again, as Pandora points out, those can be added to the Plan at a later date since the Code allows you to cure ANY default.

The reality however with loan mods: They take time-as much as more than 1 year-to push through. Less than 2% go through. If the loan is not modified the homeowner usually can't afford the home and walks away. Walking away necessarily moots out the issue of the pre or post petition arrears. The OP has already been turned down once. While there is nothing stopping the OP from trying again, chances are the loan will not be modified and if the OP cannot make the normal monthly payments the OP will walk away.

Yes - upwards of 18+ months to get a mod, however I believe its more than 2% overall between HAMP and in-house mods over all lenders. Most people are turned down the 1st time they apply for a loan mod, and that is usually due to the lenders incompetence, not the homeowners - so reapply - looking over every single line item and ensuring everything is correct. Most importantly, know the program you are applying for inside and out - and if you know you qualify, dont take no for an answer.

[despritfreya]

In response to:

"MOST mortgage companies allow the grace period, yes - however... - a mortgage company will look for any and all reasons to foreclose and ask for the stay to be lifted once in a BK situation - "grace period" or not. It is best NOT to be late on your mortgage".

1) Paying within the grace period is not being late. It is a contractual right.

2) If a lender files a LS for such a reason (not receiving payment on the 1st of the month), I would be asking for and getting Rule 11 sanctions. Pandora, that is the difference between a lay person and an attorney. An attorney knows what to do when an improper motion is filed and can quickly follow through with any necessary action without getting hot under the collar. Rule 11 is a very strong tool when used correctly.

_______________

"Again, I didnt say it wasnt possible - I said it will be harder to do."

No argument there but it is done all the time while in a 13. This past month I filed two pre confirmation motions to approve the loan mods and provided my "boiler plate" language from an SOC (Stipulated Order Confirming)to a 3rd lender so that it could finish the loan mod without delay. Placing specific language in an SOC to avoid the need to run up legal fees in the future is good practice for every attny as the goal should be to keep the cost down for the client. If your attny does not do this then he/she will learn from experience. Remember, your attny prepares the SOC (even ones used in the district as a model form) and can add what ever language he/she wants to benefit his/her client so long as that language complies with the Code.

Lastly, I believe that statistically I am correct as it relates to the 2% but I be darned if i can find where I saw it. If I ever find it I will update this. Sorry. Interestingly however, for the two Motions I filed this month and had approved the loans are still not final and I am not holding my breath as to the success of completing the process.

[Pandora]

1) Paying within the grace period is not being late. It is a contractual right.


2) If a lender files a LS for such a reason (not receiving payment on the 1st of the month), I would be asking for and getting Rule 11 sanctions. Pandora, that is the difference between a lay person and an attorney. An attorney knows what to do when an improper motion is filed and can quickly follow through with any necessary action without getting hot under the collar. Rule 11 is a very strong tool when used correctly.

_______________

"Again, I didnt say it wasnt possible - I said it will be harder to do."

No argument there but it is done all the time while in a 13. This past month I filed two pre confirmation motions to approve the loan mods and provided my "boiler plate" language from an SOC (Stipulated Order Confirming)to a 3rd lender so that it could finish the loan mod without delay. Placing specific language in an SOC to avoid the need to run up legal fees in the future is good practice for every attny as the goal should be to keep the cost down for the client. If your attny does not do this then he/she will learn from experience. Remember, your attny prepares the SOC (even ones used in the district as a model form) and can add what ever language he/she wants to benefit his/her client so long as that language complies with the Code.

Lastly, I believe that statistically I am correct as it relates to the 2% but I be darned if i can find where I saw it. If I ever find it I will update this. Sorry. Interestingly however, for the two Motions I filed this month and had approved the loans are still not final and I am not holding my breath as to the success of completing the process.

In regards to your 1.

You yourself stated just as I did... i.e,. MOST mortgage companies and IF they allow a grace period in the contract.... (please see your first reply under mine)

Which - pardon me - but I believe thats exactly what I was referring to... MOST - not all - and therein lies the difference. Not every mortgage company allows for grace periods unless its in the contract. Remember - Most.... not all. OP didnt state there was a grace period on his mortgage, therefore relying on what his attorney told him based off of information provided. You arent his attorney so you dont know if the grace period is allowed. You should know better, remember - you're an attorney...right? Right - just not his attorney.

In regards to your "No argument there but it is done all the time while in a 13.." and subsequent..."Placing specific language in an SOC to avoid the need to run up legal fees in the future is good practice for every attny as the goal should be to keep the cost down for the client. If your attny does not do this then he/she will learn from experience. Remember, your attny prepares the SOC (even ones used in the district as a model form) and can add what ever language he/she wants to benefit his/her client so long as that language complies with the Code."

Thank you, as you're right, I never stated that. As to the language in the forms and running up legal fees to keep the cost to the client down - I agree, all attorneys should do so, but not all attorneys do and like to milk their clients for all they're worth, even if the attorney is the best of the best. However - just as you stated "your attorney can add whatever language so long as its in the code.." (paraphrasing..sorry) - therein lies my point from my first post. The OP's attorney isnt you... therefore what works for you in your "boiler plate" documents (applicable code noted) doesnt mean anyone elses attorney will use the same verbage. Top of the barrel bottom of the barrel...yet all graduated with a degree from law school, but I do agree it should be every attorney's job to save their clients money first and foremost.

In regards to the "Lastly, I believe that statistically I am correct as it relates to the 2% but I be darned if i can find where I saw it. "

Its higher than 2% across the board, sorry. As of July just for MHA (HAMP) it was about 3%, which isnt much better obviously, if you run the 1.3 million of trials started to the 421K approved and in perm. mods, and thats just HAMP, not including any in-house modifications. I'd be pleased to see if you have the latest statistics for both MHA and in-house mods; please do post when you find it - and what source it is. I try to keep up to date on the latest and greatest as I have a few friends that are going through it - just as we did. Its a witch.

http://www.financialstability.gov/docs/JulyMHAPublic2010.pdf

Regarding: "Interestingly however, for the two Motions I filed this month and had approved the loans are still not final and I am not holding my breath as to the success of completing the process."

I'll agree with you on that point - reading this http://loanmodificationhomeownerreso...ere-cancelled/ - very sad

Have a good day.

[Pandora]

"As of July just for MHA (HAMP) it was about 3%, which isnt much better obviously, if you run the 1.3 million of trials started to the 421K approved"

Edited because I forgot the 2 Its 32% MHA approved..not 3%. My bad...