Deficiency Judgement on Surrendered Property?

[ChescoChris]

Hi,

Any ideas on this one?

I owned a house with an ex who filed chapter 7 (using the mortgage payment as a qualifier) then did not sign a reaffirmation and abandoned the property. Six months later, I realized what happened, notified the banks the property has been abandoned and filed for chapter 13 to surrender the property. The house is definitely underwater ($60-$80k).

My lawyer's position is that it is unlikely (but not guaranteed) that the banks will file a claim, particularly since the property is still in foreclosure limbo (BofA and Greentree) and both co-owners are party to bankruptcy so my petition was 100% payback of unsecured totaling $30k.

I just got my 341 date which is February (on an Oct filing??) -- this leaves the banks until April/May 2011 to get their acts together and act on filing a claim.

The proposed payment is ok because it does not include any claim from the surrendered house. If they push the budget though, I may not be able to afford it. It's the not knowing what could happen that is killing me. Anyone encounter this one before and/or have any advice?

[newbie2]

Your payment is based upon your disposable income. Since that won't change, your payment shouldn't change. The only thing that would be different is the unsecured creditors could (probably would) get less than 100% when the deficiency balance on the home becomes an unsecured claim. Talk to your attorney, but I don't believe this will affect your payment on your plan, only the payout to the creditors.

[ChescoChris]

Thanks Newbie!

The lawyer essentially stated as much. However, he also stated that if the mortgage company files a claim and I am no longer at 100%, it is likely that the trustee will challenge my proposed budget. I guess I was hoping for a crystal ball answer as to what will actually happen. I get so frustrated with his responses -- "..we will have to see how it plays out." Thanks again!

[newbie2]

Thanks Newbie!

The lawyer essentially stated as much. However, he also stated that if the mortgage company files a claim and I am no longer at 100%, it is likely that the trustee will challenge my proposed budget. I guess I was hoping for a crystal ball answer as to what will actually happen. I get so frustrated with his responses -- "..we will have to see how it plays out." Thanks again!

I think what he is saying is this: Because you are at 100% right now the trustee didn't go over your budget with a fine tooth comb to try and find more disposable income to give to your creditors. When the amount of unsecured claims goes up (with the surrender of your home) the payback to all the unsecureds will be less, so the trustee may look at your budget to see if you can pay more. As long as your budget numbers are realistic and your income hasn't gone up, you should be fine. Having a lawyer that will fight for you is key. I hope you are comfy with yours.

[puggymoo]

We are in the same boat. My attorney says the same thing. We are also in a 100% payback fro 48 months. I cannot find a answer if they can change the confirmed plan or not.