Relief from Co-Debtor Stay

[kmattin]

I need some help understanding a motion for relief from co-debtor stay. Nationstar Mortgage requested and received a Relief from Co-Debtor Stay in order to foreclose on the property where my wife and daughter live. Wife and I are separated.

Nationstar Mortgage was sold or assigned the servicing right on the mortgage six months ago from BOA.

BOA started and filed foreclosure a year ago 12/2012 and the case is active.

Why would Nationstar request a relief from co-debtor stay when they already in an active case? The mortgage is/was being paid outside my CH13. The stay on my house was stopped when my CH13 was confirmed on 1/2011.

Could this be a situation where one hand is unaware what the other is doing?

Any ideas would be helpful. I did contact my CH13 attorney, but he has yet to respond. My foreclosure attorney has not yet responded either.

[AngelinaCat]

I think that this is a mere formality in the foreclosure process. Did you and the wife both file CH13, or did you file alone?

[kmattin]

I filed alone after we separated.

[justbroke]

BOA started and filed foreclosure a year ago 12/2012 and the case is active.

Why would Nationstar request a relief from co-debtor stay when they already in an active case? The mortgage is/was being paid outside my CH13. The stay on my house was stopped when my CH13 was confirmed on 1/2011.

I am assuming that you listed the property in the bankruptcy and that your Plan of Reorganization shows it as "surrender". If that is the case, then Nationstar, or the current servicer, is merely getting through the formalities of a bnakruptcy stay. In bankruptcy, a co-debtor enjoys the automatic stay as well. In order to be certain that they will not violate the stay, the creditor is simply making sure that they have relief from the co-debtor stay (or to find that it is not in place).

As to the foreclosure and your foreclosure attorney... Since you are in Florida, I can give you a hint on the actual foreclosure. Nationstar may attempt to do a "substitution of plaintiff" in the foreclosure case. This may or may not cause a delay. If the mortgage was actually sold (not just a change of servicing), then the foreclosure case should be closed or dismissed. In Florida, the entity that is foreclosing must having standing before bringing suit. If the mortgage was actually sold/assigned, then a new Assignment of Mortgage must precede the date that the foreclosure complaint was filed. That sounds impossible in your case. All this may or may not buy your ex-spouse time if you are challenging the foreclosure.

[kmattin]

I did not list the property in foreclosure. I was to pay my ex-wife $500.00 per month, outside the CH13. I have no idea what she did with the money. When BOA had the servicing rights, the began calling me about mortgage payments. I called my attorney about this and he said the stay was dismissed at the time my CH13 was confirmed, this included the co-debtor.

BOA already did a substitution of plaintiff a few months ago. The foreclosure is in Nationstar as plaintiff. We are challenging the foreclosure. It is our desire to keep the house if possible.

[justbroke]

I don't understand what your Chapter 13 strategy is. (I am not second guessing you or your attorney's strategy.) If you wanted to keep the home, I would have put it in the plan... unless, and this may be your reason, the ex-spouse is to pay part of the mortgage payment as well. You mention that it is "our" desire and I do not know who that includes. If "our" includes the ex-spouse that re-purposed the prior payment contributions, then that is a major flag. Perhaps the property should be surrendered in the bankruptcy and let the chips fall where they may.

The co-debtor stay, in a Chapter 13, lasts the entire pendency of the bankruptcy (11 USC 1301). A Chapter 13 is considered a pending bankruptcy and it could last 36-60+ months. The creditor was wise to seek relief from the co-debtor stay, even if it has somehow ended.

You will need more of a strategy than a mere desire to keep the house.

[kmattin]

At the time I filed, the house was not in arrears. What happened after that IS UNKNOWN. I paid half the mortgage and wife the other half, outside my CH13. I still send my wife half the amount of the mortgage payment each month as directed by my plan.

[justbroke]

Okay, the reason it was not being paid "inside the plan" because the home was not in arrears pre-petition. However, the home is now in arrears post-petition. However, did you list the home as surrendered on your Plan or as "pay outside" (or something similar to paying outside the plan)? My concern is that if you lose the home and did not surrender the home in the Chapter 13, this could create a non-dischargeable deficiency in the future. That is why I suggest a real plan built on both your desire and any realities that may happen.

In your Plan, is the payment listed as a Mortgage payment or as a domestic support obligation/spousal assistance?

[kmattin]

It is listed as domestic support obligation/spousal assistance

[justbroke]

I was just wondering. I was (am?) worried about the house should your estranged spouse stop paying (already has) and that the house goes into foreclosure (process is already started). I was wondering if the house was "in" plan (you listed it in your plan) with a payment amount. Were you intending to discharge the mortgage debt? That's the only thing that I'm worried about for your sake.

As for foreclosure defense, is your strategy there to strategically entice (force/coerce) the lender to do a modification? Is your foreclosure attorney going to handle that as well?

[kmattin]

No, I did not have this house in my CH13 other than to pay my wife every month, outside the plan. There are no secured creditors in my plan. All were scheduled for payment outside the plan.

The curious thing to me is, BOA knew there was no c-debtor stay when the house went into foreclosure. I spoke to them about this. I spoke with my BK attorney and he stated that there was no stay concerning the property after the BK was confirmed.

It is our strategy to seek modification through mediation. Florida allows that. My attorney is having difficulties getting much cooperation from Nationstar Mortgage LLC. He says they are difficult to deal with and not really as organized as some servicers.

[justbroke]

I think your attorney needs to read 11 USC 1301, which keeps the co-debtor stay in place until the case is closed or dismissed. The reason for this, is to avoid putting pressure on the debtor themselves to actually pay through (sometimes coercive) tactics to go immediately after the debtor. The bank was very wise to motion for relief from the co-debtor stay and to get that granted, before continuing the foreclosure process.

Yes, mediation is a requirement before summary judgement or a judgement of foreclosure can be granted. Some lenders/servicers are just slow and others are just... as you said... unorganized!

(Just so that you know, having it "in your Chapter 13" means that you have technically "reaffirmed" and will be paid during the life of the plan; whether that is "paid" inside or outside the plan. Paying "inside" the plan means that it is paid through the Trustee. If you want to surrender property in a Chapter 13, then your plan actually lists it as "surrender". For a creditor to seek permission to end the co-debtor stay, you must not provide for payment in the plan (e.g. surrender) and the creditor must file a motion or wait until the earlier of dismissal, conversion, or discharge and close. If the creditor only sought relief from the co-debtor stay, then that tells me that your plan indicated that you would "surrender" the property. Otherwise, the creditor would need to seek relief from the debtor's stay under 11 USC 362 as well. So that makes me feel better.)