Surrendering house half way through chapter 13?

[filingin08]

I haven't talked to the atty yet... wondering if anyone has had experience with surrendering a house during a chapter 13?

We are a half-way through our plan. Husband found better employment 150 miles away and commutes home on weekends. Waiting for high school graduation in 2013 to relocate rest of family.

We were behind on mortgage when we first filed. Got behind again and a second claim was filed. Our house needs substantial work. We can afford the mortgage (barely) and certainly not enough wiggle room to fund an emergency fund (hence getting behind again). Yes, should have been better educated re home ownership. What's done is done.

Anyway, now that a move is on our horizon and the fact that we would have to put a lot of work/money/effort into our house to get it sale ready and since we are in the midst of a 13 now seems ideal to walk. Atty has said she has seen individuals change status of property from secured to unsecured during the 13 but not a lot of experience.

Anyone here have first hand knowledge? We're in Ohio.

Thanks.

[HHM]

It's a pain, but doable, but the petition and plan needs to modified, noticed to creditors, and approved.

[msally1947]

This is the answer I got from my attorney re my request to surrender my home:

"As for modifying your plan to surrender the home, as I explained, we have done this in a number of cases and been successful. However, I merely want you to be aware that the creditor could object and if so, they would be successful as the Bankruptcy Code specifically states that one cannot modify their plan to surrender their residence. "

Based on all the posts I have read on this forum, I thought people surrender their homes all the time. I am in a chapter 13 and am going to pursue this. My husband left me, and I cannot afford the payment or the upkeep of my house. I sent my attorney current paystubs and a new budget upon her request. Waiting to hear what happens next!

[catleg]

Try it, what is their alternative, force you to stay?
Then, just stop paying. Then they file motion for relief from stay and foreclose.
Unless your housing payment in your new location is a big savings versus your current location the plan should remain.
The problem is usually people are giving up a big house payment for lower rent which means you have extra DMI you're supposed to pay to your leech creditors.
I mean , what would happen if you tragically left a pot on the stove and had to leave the house and you came back and it was burned down?
Not advocating this, just saying, it happens.

[HHM]

"Bankruptcy Code specifically states that one cannot modify their plan to surrender their residence."

I am not aware of such a provision?

[catleg]

"Bankruptcy Code specifically states that one cannot modify their plan to surrender their residence."

I am not aware of such a provision?

Not a good sign when the lawyer starts making stuff up. I'd ask him to cite where in the code it says this. Typical lazy ch13 attorney. (i know, i have one).

[justbroke]

"Bankruptcy Code specifically states that one cannot modify their plan to surrender their residence."

I am not aware of such a provision?

Nor am I.

However, I have read arguments that 11 USC 1329 doesn't really allow secured claims to be "modified" and this is probably where the attorney was going.

Okay, so I looked, and Ohio is in the 6th Circuit which doesn't seem to like this type of modification. (Chrysler Financial Corp.
v. Nolan (In re Nolan), 232 F.3d 528 (6th Cir. 2000))

Again, the code isn't "specific" about this and the caselaw for the 6th circuit (In Re Nolan) is probably what the attorney is referring to. Other Districts (and Circuits) allow the surrender of collateral.

Given the circumstances, I would roll the dice and see if the Trustee or creditor complains about the modification.

[HHM]

Nor am I.

However, I have read arguments that 11 USC 1329 doesn't really allow secured claims to be "modified" and this is probably where the attorney was going.

I can see where the attorney is going with it, as JB points out, there is some ambiguity in the wording of Section 1329 (post confirmation modification of plans), but modifying to surrender and get a discharge, at least as I understand it, is not modifying the rights, they maintain their security interest and are able to take back the property, that is allowed under 1325(a).

[msally1947]

Thank you everyone for your comments and explanations! I looked up some of the code that you all referred to. It sounds like interpretation and a good convincing attorney makes all the difference! Unfortunately, as Catleg said, my attorney doesn't appear to fit that bill! I am going to 'roll the dice' (thanks, Justbroke) and move along with modifying my plan to surrender the house. House too big for just me, crime moving into the neighborhood, house underwater............and I could go on. I will update this forum when I get some feedback from my attorney.

Just curious, why are codes different from state to state, or district to district?

[justbroke]

Just curious, why are codes different from state to state, or district to district?

If any one of us could explain it, we'd be millionaires!

In general, one factor is that the Bankruptcy Laws must coexist with "local" State non-bankruptcy laws. Additionally, decisions don't really become precedence until the Bankruptcy Appeals Panel (BAP) or the local U.S. District Court (for that region) has made a ruling on a particular topic. In your case, the 6th Circuit Court of Appeals for the U.S. District Courts looked at this particular issue in Nolan. Once they made an appellate decision, it became the "law" of the 6th circuit. That's until someone appeals all the way up to the Supreme Court. However, that takes time and money.

Because of those differences, the caselaw varies by District and is why we generalize many things on BKForum. Some things are consistent and some things are just plain different!

[LadyInTheRed]

Just to add a clarrification to JB's answer, the Bankruptcy Code is the same regardless of what state you are in. What differs by district or circuit is the court's interpretation of the Bankruptcy Code. What differs by state is each state's laws that affect what happens in bankruptcy (the state law on exemptions, for example).

[catleg]

One of the saddest things about attorneys is that most of them are more concerned with their relationships with other attorneys they work with, rather than with their clients. Finding a mad dog attorney who puts the clients first is tough.
My humble opinion, of course.

[justbroke]

There is an attorney in Jacksonville that does pro bono work. he also stands up to the Trustees and the Judges and is responsible for some awesome pro-debtor rulings in Florida!

[msally1947]

There is an attorney in Jacksonville that does pro bono work. he also stands up to the Trustees and the Judges and is responsible for some awesome pro-debtor rulings in Florida!

Too bad I don't have THAT attorney!!!

So, all in all, from all the comments, it appears there is no 'black and white' for my situation of being in a chapter 13 and halfway through it, surrender my house. The trustee may agree or not, BofA may agree or not, and it's a crap-shoot?

If the ch 13 modification gets rejected, what can BofA do to me? I am leaving the house in a couple weeks, no matter what.

[steveok]

My wife and I divorced last year and we surrendered the home with no deficiency. They are in the middle of foreclosure to get deed to it so they can sell it, but we will be free and clear regardless of what they get according to our attorney and the trustee..