Can you help w/ my questions??

[needingsomehelp]

Gosh this has been a long and stressful road. I have a couple of questions that I am hoping that someone MAY be able to answer. First of all, we had tried working with our mortgage company in order to do a loan modification on an ARM mortgage for about 5 months. We got the total run around from them, got lost in the system, and just ended up more stressed than before!! Anyways, we filed for Chapter 13 in January, unaware that once we were in bankruptcy status that Countrywide would no longer be able to work with us.
We had our trustee meeting, have been paying out plan payment for two months now, and were just notified a few days ago that our mortgage adjusted and we are now paying an additional $500/month on the mortgage. There is just no way that we can afford this, as we are already maxed out, hubby is already working ridiculous hours and weekends just to keep up (we have two little girls too).
To make a long story a bit shorter, we were considering converting to a Chapter 7. Here is my question though, when you reaffirm is there any possibilty that your mortgage company will work out a repayment plan with you for the amount in arrears??
With a Chapter 7, we would be able to get a loan modification once the BK discharges, which as we all know the 7 discharges much before the 13 would.
Also, if that is not an option, does anyone know of anything we could do while in the Chapter 13 to lower our payments?? The worst part of this is that, if we just had a reasonable rate, we could easily afford our mortgage. It isn't that we got into a home that we couldn't afford, we got into a mortgage that we couldn't afford.... which we will NEVER do again.
Thanks for any and all help!!!

[millerc507]

I know very little about 13's. However, could you submit a new schedule to reflect the increase in mortgage payment thus lowering your 13 payment? I may not understand the whole situation but I believe you have to be current on your mortgage to keep your home in a 7. I may have misunderstood and maybe you are. If so, sorry.

[lrprn]

Welcome to BK Forum, NSH - glad you found us!

First thing to do is notify your lawyer about the mortgage increase. Since the mortgage change is permanent and ongoing, he/she should be able to file an amended Ch 13 plan that incorporates the increase. If the trustee agrees, that should free up enough to pay the increased mortgage. You still won't have any more disposable income though.

Let us know what your lawyer says, and again, welcome! Post questions anytime - we'll help you as much as we can.

[needingsomehelp]

Thank you for your replies. My lawyer is aware of the increase, and right now is trying to help us work with the mortgage company to at least do something. We just aren't getting anywhere because the mortgage company is not calling us back, nor my attorney!! It is frustrating.

Tell me, if we were to catch up on the mortgage to the point that it was only a month behind, would they possibly be willing to reaffirm if we agreed to catch up over a couple of months?? My main reason for wanting to convert to a chapter 7, is 1. so that we can do a loan modification once we are discharged and 2. so that we can be discharged quicker so that we can get our life back quicker as well.

It was just an unfortunate series of events that led us to bankruptcy in the first place. Our main goal, however is to keep our home.

Thank you all again. What a great and friendly forum!!!

[diviaruba]

I guess the big question I have is why you weren't in a Chapter 7 in the first place. If it's to protect equity in the house, converting won't help you, nor will being in arrears, which is not allowed in filing or converting to a 7.

If you're above the median, and the new mortgage payment pushes up your expenses to negate any disposable income, you might have a chance, but then you might have equity/exemption issues.

Can you give us a little more backstory to help us figure this out?

[needingsomehelp]

Hi... thank you for your response. We did qualify to file Chapter 7, however we choose Chapter 13 due to us wanting to save our home, we were in arrears, and still are. We were hoping to possibly convert to Chapter 7, however we have to come up with a little more than $8000.00 , just to cure the arrearage (is that a word? haha), and then we would still be stuck in an ARM mortgage, that keeps increasing. .
My thinking was that if we could somehow come up with the money, and then attempt a loan modification once the loan discharges, then that might work... but of course, there is no guarantee that we would be able to modify. (We tried to modify before filing, but got the run around for 3 months from our lender).

This whole thing is just one big mess. We don't have any equity in the house at this point, since the housing market took a HUGE downturn in the area, we now owe more than our home is worth, yet still we want to keep it. We love where we are.

[diviaruba]

Hi... thank you for your response. We did qualify to file Chapter 7, however we choose Chapter 13 due to us wanting to save our home, we were in arrears, and still are. We were hoping to possibly convert to Chapter 7, however we have to come up with a little more than $8000.00 , just to cure the arrearage (is that a word? haha), and then we would still be stuck in an ARM mortgage, that keeps increasing. .
My thinking was that if we could somehow come up with the money, and then attempt a loan modification once the loan discharges, then that might work... but of course, there is no guarantee that we would be able to modify. (We tried to modify before filing, but got the run around for 3 months from our lender).

This whole thing is just one big mess. We don't have any equity in the house at this point, since the housing market took a HUGE downturn in the area, we now owe more than our home is worth, yet still we want to keep it. We love where we are.

I'm sorry to say this, but you are going to have a real tough time reconciling these twin objectives. If you file to convert to a 7, you will have to cure the arrearages or lose the house. If you are able to do this, it is highly unlikely that you will get any kind of forebearance from your lender during the pendency of your bankruptcy, and also you will find it very difficult, if not impossible to re-finance or modify this loan within the short period after discharge that you will need to save it.

My advice - this house is a millstone that is pulling you under and drowning you. Cut the cord, save yourselves, rent in town for 2 to 3 years and try again later.

[needingsomehelp]

Thank you for your advice. It is something that I have actually considered for some time now. Honestly, due to the increase in interest rates, would would end up paying a considerable amount more than our home is worth, essentially loosing money.
We were first time home buyers when we got into this loan, and unfortunately had no clue about ARM mortgages. We were just repeatedly told that this was a temporary fix, and not to worry we would just refinance out of these loans. Not so much. When we started out, we both had credit scores in the mid 700's.
It has just been one unfortunate even with this mortgage company after another, and unfortunately, I know that the only way I could EVER get them to work with us is by speaking with the right person, but at this point, I can't even get them to call us back!!! It is a crazy, and very sad situation. The saddest part is that had we gotten into a fixed mortgage, we would not have anywhere near the problems that we are facing now.
My husband wants to do anything possible to keep our home, but I can't see the point in working every day night and weekend... it would be damaging to our little girls, as well as himself.
Again thank you for the advice.

[diviaruba]

They WON'T call you back. You are in an active Chapter 13. You are protected under the automatic stay. Under current BK law, there is no provision to modify mortgages on primary residences (although it is being bandied about in Congress).

When the creditor holds a consensual lien on a debtor's residence and the debtor has defaulted on mortgage payments and appears unable to maintain continuing mortgage payments or promptly cure arrearages, the secured creditor with a will often seek relief from stay in order to foreclose if the debtor is in arrears on mortgage payments and if it appears unlikely that the debtor will be able to continue to fund a plan that both cures arrearages and maintains ongoing mortgage payments.

Your husband needs to come to grips with what is likely to happen here - in spite of your best efforts, the hole is getting deeper and deeper.

[Flamingo]

Plain and simple, you cannot afford the house. Short of hitting Powerball or an unknown relative leaving you a huge inheritance, you need to face reality here. A house is a house - there will be others in your future. What is important is right now and you simply cannot afford this present house. Let it go, regroup, recover and start looking again in a few years. Best of luck to you...

[ssdsco]

Also, if that is not an option, does anyone know of anything we could do while in the Chapter 13 to lower our payments?? The worst part of this is that, if we just had a reasonable rate, we could easily afford our mortgage. It isn't that we got into a home that we couldn't afford, we got into a mortgage that we couldn't afford.... which we will NEVER do again.
Thanks for any and all help!!!

I pulled this off the HUD website. It might be worth a phone call.



2. Talk to a housing counselor - (Top)
If you don't feel comfortable talking with your lender, you should immediately contact a housing counseling agency and make an appointment with a counselor. Most FHA counselors are free or cost very little. A counselor can help you:

Review your financial situation, determine what options are available to you, and negotiate with your lender
Learn which of the various workout arrangements lenders consider makes the most sense for you and your family, based on your circumstances
Call the lender with you or on your behalf to discuss a workout plan
Protect you from future credit problems before you get too far behind on mortgage payments
Give you information on services and programs in your area that provide financial, legal, medical or other assistance
A good counselor will help you create a monthly budget plan to ensure you meet all your monthly expenses, including your mortgage payment. Your personal financial plan will clearly show how much money you have available to make the mortgage payment. This analysis will help you and your lender determine whether a reduced or delayed payment schedule could help you.

To find out more about HUD-approved housing counseling agencies and their services, please call toll free (800) 569-4287 on weekdays between 9:00 a.m. and 5:00 p.m. Eastern Standard Time (6:00 a.m. to 2:00 p.m. Pacific Time). The same number can give you an automated referral to the three housing counseling agencies located closest to you.

Many of these local housing counseling agencies are connected with national and regional housing counseling intermediaries (mediators). The website for HUD-approved National and Regional Housing Counseling Intermediaries describes the full range of assistance offered and provides maps showing their member's locations.



Here's a link to the web page.

http://portal.hud.gov/portal/page?_pageid=33,717348&_dad=portal&_schema=PORTAL