Mortgage Implications

[nervousSC]

Can anyone tell me what the implications will be on my credit report or on any other aspect of my life if I don't pay my mortgage for two months? My attorney has suggested that I do this in order to pay him and then put the two months in the mortgage. I'm most concerned about what it will do when I want to get credit after the discharge. I will be filing June 30th, and assuming (please, please, please) that everything goes as planned, I will be on a 36 month plan ($100-$166)...which will end up being the 4th year of living in my house (when I plan to put it on the market), I need to sell by the 5th year b/c I have a 5-year ARM and want to be out before interest rates go up.....SO...will this hinder my ability to buy a new house approximately 1 year out of bankruptcy? Should I try to scrape cash together and pay my mortgage?

Thank you!

[aa06a47]

Can anyone tell me what the implications will be on my credit report or on any other aspect of my life if I don't pay my mortgage for two months? My attorney has suggested that I do this in order to pay him and then put the two months in the mortgage. I'm most concerned about what it will do when I want to get credit after the discharge. I will be filing June 30th, and assuming (please, please, please) that everything goes as planned, I will be on a 36 month plan ($100-$166)...which will end up being the 4th year of living in my house (when I plan to put it on the market), I need to sell by the 5th year b/c I have a 5-year ARM and want to be out before interest rates go up.....SO...will this hinder my ability to buy a new house approximately 1 year out of bankruptcy? Should I try to scrape cash together and pay my mortgage?

Thank you!

I am truely suprised your attorney suggested this, as under the new law, I didn't think they were allowed to give "financial or pre-bk" advice.

Remember and calculate for this...all arrears must be paid in a chapter 13 plan. There might be additional legal fees..not sure on that one. Verify that your chapter 13 payment won't have to be made larger to be able to pay your secured creditors. Also, check your mortgage papers and make sure a default on a 5 year arm doesn't put you at a different interest rate. Not sure if it is applicable for mortgages, but the arm may have certain stipulations.

Don't count on a 3 year plan. I understand they aren't giving them out too much these days.

Whether you can get a loan 1 year after the payment plan is complete will probably depend on how creditors view your situation. Being late on a house payment prior to filing will more than likely hurt your chances of getting a good loan.

You might consider this, even if they raise your interest in a 5 year arm, chances are it won't be much higher than the current going rate, and it might even be lower than a rate you could get 1 year after your bk is dismissed.

Clear as muddy water I presume. Summary ...might be a good idea but in your situation with the arm, thinking you'll be trying to get another home in 5 years.., chapter 13 payment might have to raise to pay the secured creditors...I would talk it over with your attorney and see what is reaction is to the concerns above. If the attorney was a real sport, he would tell you to pay him 500 bucks and finance the rest of his fee in the chapter 13. That way, your mortgage would still be paid and not be a neg mark later on in life.

[SinkingFast]

I'm surprised your attny just blatantly said, "Oh! Skip a couple mortgage payments and pay me with the money. We'll just slip your arrears into your Ch 13 plan payments."

BK attnys are expressly forbidden from giving financial advice under the New Law. Aa was right on about that.

Our attny told us some financial issues we needed to tend to before filing. He told us some things we could not do to settle those issues. Things that would look fraudulent to the Court. But the attny never once told us how to go about settling our financial issues.

Plus,........... It's easy for attnys to "advise" things sometimes. They aren't, after all, telling the client to do something illegal. You possibly won't risk Foreclosure by missing a couple of payments. But attnys don't have to live with the fallout of their advise either. Like having to look for new financing and explaining to a prospective mortgage Lender why you missed 2 payments right before you filed BK. Like your current interest rate taking a hike. Like getting a higher interest rate on other loans further down the road.

And I wouldn't count on a 3 year plan either. Unless you're below the Median and paying back only to Secureds and you can meet your debt obligations in that amount of time. The shortest New Law Ch 13 plan I've personally seen on PACER was a 4 year plan. The people were way below the Median, with arrears on their home, owed property taxes, and were behind on car payments. They got a 4 year Ch 13 payment plan and 100% of their payments are going towards Secureds and their property taxes on their home. Their 1st and 2nd mortgage and the car payment are all now in their Ch 13. Unsecureds aren't even getting a penny.

If you can, wait to file, and scrape up that money some other way. Keep your mortgage outside of the Ch 13 payment plan so you'll have a positive reporting, secured tradeline coming out the other side of BK.

[nervousSC]

I'm below the median and I owe property taxes $1500. I have a Rooms to Go $2300 and a Best Buy $800, plus the atty fees will be in the BK....so I guess that's why they said 3 years. I honestly don't have a clue as to how this will all add up........

[aa06a47]

If I understand your payment ($100-$167) you will only be paying in $3600 to$5900 in a 3 year plan. You are already indicating $4600 in secured debt in the plan (not including attorney fee's)...plus I'm assuming rooms to go and best buy are all "secured"? There isn't a lot of wiggle room in there for making up any missed house payments. Most trustees fees will eat up probably close to 10% of your payments if not more.

I think your attorney is giving you some very bad advice. This is just my opinion based upon what you have indicated so far. His advice will push you to a longer chapter 13 plan.

[aa06a47]

I'm below the median and I owe property taxes $1500. I have a Rooms to Go $2300 and a Best Buy $800, plus the atty fees will be in the BK....so I guess that's why they said 3 years. I honestly don't have a clue as to how this will all add up........

You are listing what I presume as secured debt. Is there any other unsecured debt? It seems a waste to file with so little total debt, unless of course your not listing your unsecured portion here. Most attorneys will charge 1/2 of what your listing here in just attorney cost.

I am not judgeing you in any way. I do not know your situation. I just think BK is a silver bullet that should be a last resort. Next year, you won't be able to use that bullet again. Your debt as presented might be best worked out with a true credit counseling service (one approved by the courts).

[nervousSC]

Oh no that's not all of it....just the secured part. The rest is about 20000......

[SinkingFast]

I don't understand why you aren't going Ch 7 then.

You're below the Median. You can set up a repayment plan for the taxes and that gets figured in on the Means Test as Priority Debt payment.

If you're current on your home and don't have unexemptable equity in a car, then why not file Ch 7??

[nervousSC]

I have equity in my car about 2-3K. That's the B-I-G problem with me filing a Ch 7.

[SinkingFast]

Maybe, maybe not.

Your vehicle exemption limit is $1200, right??

That means you have $800 to $1800 in equity possibly.

Trustees know when they take a car, they have costs to sell, they aren't going to get top dollar as they sell quick and don't wait for the best offer. Generally speaking it's a hassle with not the best return possible.

The Trustee could offer to settle with you on the car. You pay the Trustee maybe half, like $1K, and you get to keep the car. Trustees will take payments for up to a year, interest free.

Did you Consult with more than one attny?? Just curious??

[no_it_all]

Can anyone tell me what the implications will be on my credit report or on any other aspect of my life if I don't pay my mortgage for two months?

If you skip eight weeks a 30 day late will probably show up on your report. Any longer and it will probably show as a 60 day late. Not the end of the world but lenders assume you will pay your mortgage before anything else.

My attorney has suggested that I do this in order to pay him and then put the two months in the mortgage.

Why don't you pay the mortgage and put the attorney in the plan??

I'm most concerned about what it will do when I want to get credit after the discharge.

Not too much in this world will tank your FICO as quickly as a BK will. Figure after a year or two it will be built back up (somewhat).

I will be filing June 30th, and assuming (please, please, please) that everything goes as planned, I will be on a 36 month plan ($100-$166)...which will end up being the 4th year of living in my house (when I plan to put it on the market), I need to sell by the 5th year b/c I have a 5-year ARM and want to be out before interest rates go up

HUH?? You want to sell because the interest rate will go up? Do you know that as a fact and do you know how much? Maybe you want to cash out the equity and downsize?? What is your reason for selling?? Actually, the more I think about it, it doesn't make a lot of sense to sell a house that you already have a mortgage on..to what?? Try and qualify for another mortgage?? Please explain...

SO...will this hinder my ability to buy a new house approximately 1 year out of bankruptcy? Should I try to scrape cash together and pay my mortgage? Thank you!

Yeah, a bankruptcy will hinder your ability to get a mortgage...I think the least of your worries is wondering how eight weeks late on a mortgage payment today is going to affect your credit ability four or five years from now. You are asking about the late payment when you are considering bankruptcy...That is sorta like worrying about the pimple on your nose when you need a heart transplant!! You are being SMART to think about where you will end up on the other side (when the BK is done). What are you goals??

[no_it_all]

I have equity in my car about 2-3K. That's the B-I-G problem with me filing a Ch 7.

Please explain why owning a $2,500 car is a B-I-G problem with filing for Chapter 7..I am confused (which is not that easy to do!)..

[nervousSC]

Why don't you pay the mortgage and put the attorney in the plan??


I'm putting approx $1800 in attorneys fees, in SC the rate for a CH 13 is $3000 and they won't put all of it into BK, usually will only put half in.

HUH?? You want to sell because the interest rate will go up? Do you know that as a fact and do you know how much? Maybe you want to cash out the equity and downsize?? What is your reason for selling?? Actually, the more I think about it, it doesn't make a lot of sense to sell a house that you already have a mortgage on..to what?? Try and qualify for another mortgage?? Please explain...

It's an ARM, it says the interest rate will go up, why wouldn't it? Forgive me, I'm a dunce when it comes to these things. I would just like to move out of SC eventually, don't really like here.

Yeah, a bankruptcy will hinder your ability to get a mortgage...I think the least of your worries is wondering how eight weeks late on a mortgage payment today is going to affect your credit ability four or five years from now. You are asking about the late payment when you are considering bankruptcy...That is sorta like worrying about the pimple on your nose when you need a heart transplant!! You are being SMART to think about where you will end up on the other side (when the BK is done). What are you goals??

[nervousSC]

Your vehicle exemption limit is $1200, right??

Yes, $1200 exemption.


The Trustee could offer to settle with you on the car. You pay the Trustee maybe half, like $1K, and you get to keep the car. Trustees will take payments for up to a year, interest free.

The Trustee will offer to settle, but from what I understand they don't take payments in SC.

Did you Consult with more than one attny?? Just curious??

I consulted with three, one was horrible, he told me that if I was in a 13 and ever came into money I could just pay the 13 off early w/o paying ALL of the debt. The other two, the one I'm seeing now and the other were pretty much even and they all told me the same thing.

[SinkingFast]

True what Trustees do varies from area to area, District to District, Court to Court, and even Trustee to Trustee within the same Court.

Did you ask you attny if a payment plan on a settlement offer with the Trustee is even feasible. Or has your attny said, flat out, that the Trustees do not take payments and that is not an option as a form of settlement to get a Ch 7.

There was a poster here from NC who filed Pro Se, applied their exemptions incorrectly, and was at a $7K difference with the Trustee. The Trustee agreed to take $3K instead. Didn't care where the couple got the money. Borrow from friends or relatives, whatever. He didn't care. He'd even take payments.

I live in a totally different State than that and every attny here has said the Trustees will take payments.

I'm just wondering if the attnys are telling you this to push you into filing Ch 13 so they get a bigger fee and piece of the pie every year you're in the plan off your income tax refund.