Brand new here and stressing over how to proceed with our CH 13

[jennhalcyon]

Hello all, I am brand new to this forum and I thank you in advance for reading my post.

DH and I filed CH 13 last October. We were above median HHI but showed negative DMI. We were behind on our 1st mtg and in foreclosure so we needed CH 13 protection. We are also trying to strip our 2nd lien. You would think that almost a year into this process we would have some answers to our status but for many reasons things have been delayed and delayed. All the while, I have been working VERY HARD to get our 1st mtg modified and SUCCESS!! We got an offer from our mtg company for a permanent mod with an interest rate reduction to 4% for life of loan (which is a savings of $350/month!). We need court approval of course, and that there is where I am unsure how to proceed.

We have a hearing this Tuesday Oct. 5th for our adversary proceeding to strip the 2nd mtg. We have a confirmation hearing on Oct. 19th with the trustee to get our plan confirmed. But our trustee payment is almost all arrearages on our mtg, which Wells is capitalizing as part of the loan mod. So, WHAT DO WE DO? Do we go for the lien strip then the confirmation? Then request the court approve the loan mod? If so, what happens to our trustee payments if we don't need to pay the arrearages through the trustee anymore? Or do we settle on the 2nd mtg instead of stripping and try to convert our 13 to a 7 and get rid of the trustee payments? If we can even do that, do we have to do a new schedule I and J or do they work off the one we created when we filed (my income varies and we show slightly more income now vs last October).

I hope I have given adequate info...if I have left anything out I would be happy to clarify.

BTW, I am supposed to talk with my BK atty Monday but I don't have alot of confidence in her ability to think a few steps ahead to what is in our best interest, so I am trying to arm myself with as many good options as possible for my meeting with her Monday.

THANK YOU!!!
Jenn

[Cristo]

Do you have other debt that you are trying to get rid of like credit cards? I think the $350 you would be saving on your mortgage would now be added to your DMI. Depending on how much you were negative that might make a difference. I think the arrerage payment would go away, but your DMI would go to any other debts you are paying through your plan, like a car payment, back taxes, etc. It's hard to know without more information. If you strip your second, it would be unsecured so your DMI would now go to pay for that. I don't know too many people who have been sucsessful settling with their second unless they are willing to pay 50% or more.

I am not confirmed with my own plan yet, so I am not a difinitive answer on how things will proceed. I got my 1st mortgage modified before I filed and the reduction in payment gave me enough DMI so that I could not file a ch 7. So, in effect I shot myself in the foot as far as getting a quick exit from BK-land, but since I'm planning to stay in my house, the long term benefit of the mortgage mod will be worth it, and now I get to strip the 2nd too so if I can keep my payment low it will be better. I don't know if it would be easier for you to dismiss your 13 and proceed with the mod and then refile with whatever chapter you come out as. Why do you need court approval to finalize your mod? Is it just because you are in 13? That might be another reason to dismiss. I would do some work with NOLO's means test calculator with your new payment, your new income, etc and see how your DMI would come out.

[jennhalcyon]

Hi Cristo,

Thanks for your reply! We do have other cc debt...to the tune of $20k (cc and personal loans). We also have $35k 2nd mortgage, which we are hoping to have stripped. When I do the Nolo test and plug in current income and current numbers, I get about a $900 negative DMI (that surprised me), and I went off of the schedule J my atty did last October. On the schedule I we are close to $0 DMI based on our actual expenses. Because we are over the State median HHI, we are stuck in this for 60 months (49 months to go). We have paid almost $3k already over the last 11 months, which should more than cover our atty balance, a small tax bill priorty claim, and trustee fees. So if we are lucky maybe we can get the 2nd stripped on Tuesday, get the court to approve our mod and then confirmed with an almost $0 payment!!! Oh, wouldn't that be awesome!