Considering a 13 to save home, discharged a 7 two years ago.

[indeep59]

Many questions here.

I have been trying to modify my mortgage a second time and have not gotten anywhere with the bank. BOA started foreclosure and the sale date is in May.

This (and the second mortgage) have been discharged in the 7. I have also tried to reinstate the loan (50k in arrears) with a gift from my mother in law. However, we are about $5000 short and not sure if we can make up the difference by the sale date.

BOA is not accepting any payment plan or anything, it's all or nothing.

I am on the home alone, my wife is not a debtor to this, we married after I bk'd.
The home is worth probably around what I owe, which is approx 460-470k, maybe more with the fee's,arrears etc. The second adds another 130k to that.

I'm not sure what the best thing to do is.
We want to stay here, the new wife loves the place.
Either try to come up with all the arrears, or try again to get some sort of mod, or try a 13.

I do have an appt with a Fannie Mae counselor next week to discuss, (they called me) so there is a very slight chance of something there.

Any opinions on this?
Would I be better off in a 13 paying back a little at a time?
Or just get it all over with now and pay everything back?
If I let Fannie Mae (and/or BOA) know of my intention to bk, will that help or hurt my chances of modifying?
Does a 13 force you to deal with the second as well? Make payments to that?

I would love to have the second stripped but I see that's hard to do. If I can't then ultimately I would try to settle it for a percentage way down the line.

I know a 13 puts me back to square one as far as recovering my credit, of which has been much improved since the discharge.

Any insight would be greatly appreciated!
Thanks!

[TheBajan]

I'm really new to this... we filed a 13 on Feb 9 and are still waiting for confirmation of the plan. We had a second on our home that was stripped off. You can look into that as an option if you owe more on your first mortgage than the house is worth. If you are unable to strip it, and you want to keep the house... it's my understanding that you will have to keep the second mortgage also (in it's entirety). You won't be able to negotiate it down like you can other unsecured creditors. That's how my lawyer explained it to us. Fortunately, we were able to do the lien stripping. Otherwise we would not have been able to try to keep the house. I'm sure there are others here with more insight. I know there are time restraints between discharging a 7 and filing a 13 but I don't know what they are (either 2 or 4 years??).
Best wishes,
The Bajan

[Pandora]

Many questions here.

I have been trying to modify my mortgage a second time and have not gotten anywhere with the bank. BOA started foreclosure and the sale date is in May.

This (and the second mortgage) have been discharged in the 7. I have also tried to reinstate the loan (50k in arrears) with a gift from my mother in law. However, we are about $5000 short and not sure if we can make up the difference by the sale date.

I'm not sure what the best thing to do i.... We want to stay here, the new wife loves the place.
Either try to come up with all the arrears, or try again to get some sort of mod, or try a 13.

Any opinions on this?
Thanks!

You already filed and discharged the debt... why would you want to file a ch. 13 for arrears? You cant strip the 2nd because you cannot get a discharge due to time frame of filings. You also dont want to have to reaffirm a debt that's already been discharged.

I'm sure your new wife loves the house, however you filed BK for a reason - and that reason included your house. You borrowed $ from your MIL to repay arrears.... you do realize that not only will you have to declare the $50K from MIL, but to keep the house you will have to pay all arrears as well as the regular mortgage payment....right? If you filed Ch. 7 and let the house go into arrears, that means you couldnt afford the house payment to begin with - now you're trying to afford it by borrowing money and getting a mod. The huge red flag thats waving ever so boldly in front of you is there for a reason.

Do the smart thing - save your money, let BOA have the house and rent a smaller more affordable home. Tell wifey that 4 walls does not a home make.... family makes a house a home. ;)

[SMinGA2]

Some things vary by district - but my understanding:

You filed ch. 7 less than 4 years ago. You may file ch. 13 now, but you will not have a discharge at the end. The 13 would need to include any unsecured debt (credit cards, medical, IRS, etc.) and those debts must be paid in full during the plan. Also the mortgage arrears would need to be paid in full during the plan. If you include your MIL as a debt, the same. If she did make the $50,000 as a gift - you wouldn't have to pay it off in the 13. The 2nd could not be stripped, because that would make it unsecured. So that you'd have to pay it off in the plan.

To decide if this is even a viable option, add up all your unsecured debt + mortgage arrears. Add $3000 for attorney fees. (Ballpark #, your actual may be a little more or less.) Divide by 60. And multiply by 1.1. Trustee fee is 5-10% of your payment, depending on district. The 1.1 is not exact, but should help you account for it fairly well.

Can you pay that + your regular mortgage payment + 2nd payment + all other expenses/bills? If not, then your remaining options is to see what you can work out (if anything) on the mortgage. But the end result is probably that you can no longer afford this home.

[indeep59]

Some things vary by district - but my understanding:

You filed ch. 7 less than 4 years ago. You may file ch. 13 now, but you will not have a discharge at the end. The 13 would need to include any unsecured debt (credit cards, medical, IRS, etc.) and those debts must be paid in full during the plan. Also the mortgage arrears would need to be paid in full during the plan. If you include your MIL as a debt, the same. If she did make the $50,000 as a gift - you wouldn't have to pay it off in the 13. The 2nd could not be stripped, because that would make it unsecured. So that you'd have to pay it off in the plan.

To decide if this is even a viable option, add up all your unsecured debt + mortgage arrears. Add $3000 for attorney fees. (Ballpark #, your actual may be a little more or less.) Divide by 60. And multiply by 1.1. Trustee fee is 5-10% of your payment, depending on district. The 1.1 is not exact, but should help you account for it fairly well.

Can you pay that + your regular mortgage payment + 2nd payment + all other expenses/bills? If not, then your remaining options is to see what you can work out (if anything) on the mortgage. But the end result is probably that you can no longer afford this home.

Well if you put it that way! :-(

No there's no way to do all that.
They'd make you pay a 30 year 2nd mortgage in the plan of 5 years? That seems not right though.

That would be 2200 a month just for that, 2900 per month mortgage, 1000 per month arrears and not even including car payment (only other debt)

I guess it's best NOT to do this but either pay off arrears now or modify now (slim chance) or let the house go.

Thanks for the reality check.

[SMinGA2]

Its not that every 2nd must be paid in full during a plan. My point is that stripping the 2nd will NOT work for your situation, because you are not 4+ years post your chapter 7 case.

Here is the premise behind stripping a 2nd mortgage:
1. House is worth $200k. You owe $225k on 1st and $75k on 2nd. (Example.) Since the house is worth less than your primary mortgage, the 2nd is technically not secured. Meaning there is not enough equity in your home to cover even $1 of the 2nd mortgage. Stripping the 2nd in a ch. 13 converts it to unsecured debt - and removes the lien that is attached to the property.
2. At the end of the plan, any remaining unsecured debt - that was not paid during the plan - is discharged.

Since you cannot get a discharge (due to the recent chapter 7), any unsecured debt in your plan MUST be paid in full. So stripping the 2nd is pointless if you cannot get a discharge. If you were eligible for a discharge, it would be a totally different story.

How long until the 4 year anniversary of your chapter 7 filing? (Not discharge.) If you could hold off until then, you could go for a lien strip. That would eliminate your 2nd payment as you'd be eligible for discharge. If that is not a possibility then ch. 13 now is probably not going to save your house. Though its still best to confirm and go over your #s with a local attorney. Any that you meet with, make sure they understand when you filed ch. 7.

[indeep59]

Its not that every 2nd must be paid in full during a plan. My point is that stripping the 2nd will NOT work for your situation, because you are not 4+ years post your chapter 7 case.

Here is the premise behind stripping a 2nd mortgage:
1. House is worth $200k. You owe $225k on 1st and $75k on 2nd. (Example.) Since the house is worth less than your primary mortgage, the 2nd is technically not secured. Meaning there is not enough equity in your home to cover even $1 of the 2nd mortgage. Stripping the 2nd in a ch. 13 converts it to unsecured debt - and removes the lien that is attached to the property.
2. At the end of the plan, any remaining unsecured debt - that was not paid during the plan - is discharged.

Since you cannot get a discharge (due to the recent chapter 7), any unsecured debt in your plan MUST be paid in full. So stripping the 2nd is pointless if you cannot get a discharge. If you were eligible for a discharge, it would be a totally different story.

How long until the 4 year anniversary of your chapter 7 filing? (Not discharge.) If you could hold off until then, you could go for a lien strip. That would eliminate your 2nd payment and as you'd be eligible for discharge. If that is not a possibility then ch. 13 is probably not for you. Though its still best to confirm and go over your #s with a local attorney. Any that you meet with, make sure they understand when you filed ch. 7.

Thanks I understand.

That can be a possibility for 2 years from now (filed April 5,2010) I guess if things don't improve or I'm looking to just strip the second (though that may be looked down upon by the court?)

I doubt home prices shoot up in the next 2 years, but there could be the possibility of negotiating a second settlement by then instead of having to bk13 to strip it.