Foreclosure while in a confirmed ch. 13

[bigreddog]

We have been in our ch. 13 for 42 mths. now. We're hanging in there, but here's the problem.
When we first filed, our mortgage and 2-2nd mortgages were included in the BK but paid outside of the plan. When we 1st met w/ the trustee, our attorney gave him our home appraisal that was done 8 mths. earlier. BUT..... At that time we felt we could sell the house for what we owed. The reason we believed this was AFTER the appraisal, we added an addition so that we would have a home and the rental income. I never kept really good track of the expenses, but they all went through our personal checking and it was presented to the trustee as required. That addition which essentially was a large apartment for my wife and self, turned out costing us $100k.

At this stage of our BK, can we let the house go back? Would we be responsible for the balance left after the sale? Can this be done so late into our 13?

[lrprn]

We have been in our ch. 13 for 42 mths. now. We're hanging in there, but here's the problem.
When we first filed, our mortgage and 2-2nd mortgages were included in the BK but paid outside of the plan. When we 1st met w/ the trustee, our attorney gave him our home appraisal that was done 8 mths. earlier. BUT..... At that time we felt we could sell the house for what we owed. The reason we believed this was AFTER the appraisal, we added an addition so that we would have a home and the rental income. I never kept really good track of the expenses, but they all went through our personal checking and it was presented to the trustee as required. That addition which essentially was a large apartment for my wife and self, turned out costing us $100k.

Let's see if I have this straight. You did the $100K addition to your home before filing. You paid for it in full out of your checking account.

A few questions for you:

(1) How much do you owe right now on your primary mortgage, first second mortgage, and second second mortgage?

(2) What is your house's current value right now? (In other words, what have comparable houses to yours have sold for in your neighborhood during the last six months?)

(3) If your house is worth less than the total you owe on the house, have you talked with your lawyer about the possibility of stripping either or both of your second mortgages as a part of your Ch 13 rather than surrendering the house?

(Of course, if your house is incredibly underwater, surrender is always an option to consider.)

[bigreddog]

I'm sorry. I didn't mean we paid for the entire addition, I just meant that we showed all the money and any expenses for the addition in our checking statements and the trustee seemed fine with that.

currently the Primary bal. is $266K We have a second of $30k and a third for $33k

I have no idea what it is appraised for, but the town has us assessed at $248,000 and that was after a fresh walk thru this spring. This town is supposedly at 100% because the townwide assessment was just done.

Actually, no we havent' talked to our lawyer because he moved away and doesn't return calls. I guess I what I"m asking is, " can we walk away from the house while in the ch. 13?

[catleg]

You can amend your plan to let go of the house.
Or you might choose to convert to a chapter 7.

[justbroke]

I guess I what I"m asking is, " can we walk away from the house while in the ch. 13?

Yes you can, but it's a very specific process and your attorney must follow the local process for this. Please know that the difference between the local housing allowance and your mortgage payments (PITI) will be required to pay into the plan and to the unsecured creditors. Since you were paying the house outside the plan, you would then need to pay that "difference" to the Trustee to be distributed to the unsecured creditors.