Surrender Property in Chapter 13

[niko]

I've got a question regarding surrendered property in Chapter 13.

I surrendered my house in April 2010, and the bank still did not foreclosure. Is it possible to include it back to chapter 13 and strip the second mortgage on it? or is not possible? I have 6 months left in my BK to complete. Just curious and want to know my options since CAIVRS do not let me get any loan because of it.

[159515951]

Are you saying you want to go back and reaffirm the original mortgage? That sounds like a really, really bad idea, as the bank will probably want to have a nice chat with you about the huge delinquency that has built up before and during your 13. They might allow some sort of modification, but I don't see you coming out on the winning side of this one.

If the 2nd is included in your Chapter 13 and the entire amount of the 2nd is over and above the fair market value of the home, I believe it becomes unsecured as part of your 13 and will be treated like any other unsecured creditor. If the home's worth includes at least part of your 2nd, then that part of the loan becomes secured. It stands to reason that you'd probably have to reaffirm that as well as part of another modification process.

[despritfreya]

I surrendered my house in April 2010, and the bank still did not foreclosure. Is it possible to include it back to chapter 13 and strip the second mortgage on it? or is not possible? I have 6 months left in my BK to complete.

Assuming you are still living in the home this is not possible for several reasons. . .

1. You have a confirmed plan. The order confirming is binding upon the creditor AND the debtor. Changing at this late stage just is not going to happen.

2. Even if you could modify your Plan you would have to cure all pre AND post petition arrears within the balance of the length of the Plan. If you filed in 2010 and only have 6 months left your overall Plan was less than 60 months. Theoretically you could extend the Plan to 60 months but your monthly Plan payment would be astronomical and you would have to resume regular monthly payments to the mortgage lender. No doubt the lender would strongly object to your change in course (even though it has not taken steps to foreclose).

3. As it relates to the second mortgage, even if you could try the strip, the value of the home would be based upon your filing date, not now in 2013. That might be ok since the value was probably less. However, if there is even one penny of equity in the property over what you owe to the first, you cannot strip off a junior lien that is secured by your principal residence. When calculating what is owed to the first you are not going to be able to utilize today's amount. No Court is going to allow you to screw with the second by creating a bigger default on the first and then capitalizing on the fact that, as a result, you increased the total amount owed to the first. (Get the picture?)

If you are still living in the home don’t look a gift horse in the mouth. Continue to reside there RENT FREE until someone forecloses.

If this property is not your residence, unless you can prove that the property produces income to cover ALL the additional money it will take to cure all defaults and make going forward payments, the property is not necessary for an effective reorganization and the Court will not allow you to spend money on it. Further, at this late stage, even if it was income producing the Court is not likely to allow you to change course since, clearly up to this point it was not necessary for your effective reorganization.

Bottom line, forget it. Just not going to work at this time.

Des.

[LadyInTheRed]

Are you saying you want to go back and reaffirm the original mortgage? That sounds like a really, really bad idea, as the bank will probably want to have a nice chat with you about the huge delinquency that has built up before and during your 13. They might allow some sort of modification, but I don't see you coming out on the winning side of this one.

If the 2nd is included in your Chapter 13 and the entire amount of the 2nd is over and above the fair market value of the home, I believe it becomes unsecured as part of your 13 and will be treated like any other unsecured creditor. If the home's worth includes at least part of your 2nd, then that part of the loan becomes secured. It stands to reason that you'd probably have to reaffirm that as well as part of another modification process.

There are no reaffirmations in Chap 13.

[filingin08]

1. You have a confirmed plan. The order confirming is binding upon the creditor AND the debtor. Changing at this late stage just is not going to happen.

This comment is not always the case. We are opposite the OP and have decided to give up our house. We are about 3 months from finishing our plan and have motioned to surrender. (Jobs in different city necessitated move, house is underwater, lender agreed to DIL but has also filed to foreclose.) As long as creditor does not object, it will be treated the same as any other unsecured. We know it's not a guaranteed deal (although attorney said she's never seen an objection). Now waiting (im)patiently for filing deadline to come and go.