Refinancing

[Kingxray]

Hi all. We have a little less than 2 years left on our (5 yr.) Chapter 13 BK. Our mortgage company is working with us to refinance our mortgage. We want to take advantage of the current interest rates because who knows what they will be in another 2 years.

Here's my concern, the mortgage company needs permission from our trustee. The mortgage company said they do it all the time. I am afraid to contact the trustee because she gave us a really hard time when we first filed. Since we've been confirmed, she has left us alone. I don't want to ruffle any feathers by drawing attention to our case again.

Any opinions on this? Has anyone ever refinanced during Chapter 13? Do you know what is involved with getting permission from the trustee? Will the trustee want us to pay the savings from the refi back into our plan?

Would love to move forward on this but would hate for it to bite us in the ass at the end. Any advice would be helpful. Thanks in advance.

[justbroke]

Receiving permission to refinance is not an issue with a Trustee. The Trustee is just making sure you are paying on time and the lender will want to know this. It is the court from which you seek approval. (Motion to Incur Debt and Refinance, or something similar.) So long as it doesn't affect your plan, the Trustee typically does not care and will not object to your motion.

Permission form the Trustee is typically as easy as showing the Trustee that your DMI is unaffected or at least that the unsecured creditors will not suffer. This could be done through a letter from your Attorney and that letter would show that you have a pre-approval, what your payments would be, how it could/would affect your Plan, and anything else important relative to your Plan. What a Trustee would not want to see is an increase in your payment that affects the unsecured creditors!

[LadyInTheRed]

Will the trustee want us to pay the savings from the refi back into our plan?

If the refi will decrease your mortgage payment, the trustee very well may insist on an increased plan payment. You might be able to counter that if your other expenses have increased in the last 3 years, but that may require a whole new look at your income and your current expenses. Ask your attorney what you can expect from this particular trustee. If you are locking in a lower interest rate, look at it in the long term and don't let the possibility of an increase in the plan payment equal to a decrease in mortgage payment stop you.

[Kingxray]

Thanks much. The savings and being able to pay it off in 15 yrs is well worth paying extra into the plan for the 20 months we have left. We are already approved from the lender just need the ok from the trustee. I hope she okays it! Thanks again for the info.

[zeezee]

Would you mind if I ask who your lender is? I have considered trying to refinance my mortgage but wasn't able to get anyone who was able to do it to respond. I have about 7 months left in my plan.

[Kingxray]

Would you mind if I ask who your lender is? I have considered trying to refinance my mortgage but wasn't able to get anyone who was able to do it to respond. I have about 7 months left in my plan.

I called our mortgage company because they knew our situation and our payment history. It's Flagstar Bank, Troy, MI. Maybe try your mortgage company.

[toojerm]

As I've posted here before. I whiffed on two attempts to refi during my ch13 (100%) simply because the trustee/court did not respond in time for the rate lock, requiring me to start again. After losing out on two seperate appraisals, I decided to wait until post discharge. I was discharged in June 2013, and refinanced in August no sweat. Best of luck to you. I know what a pain in the rear the process can be, even if it makes your interest/payment go down which would only aid in the successful completion of the plan.