why did the attorney tell me to stop making mortgage payments?

[sjr1]

I just read a post that advised someone if they knew they were going to walk away from the house post bk, to not sign a reaffirmation and just do a ride-thru. They stressed to make sure they stayed current on their mortgage through the bk process so the court would allow them to do the ride thru.

I just spoke with an attorney yesterday who told me the exact opposite. We are current (and always have been current) but the attorney said if we plan to surrender the house, to stop making payments. He said that the amount of time it takes to complete the whole foreclosure process could be up to a year and in that time we could stay in the house without paying anything.

But, the advice from the post makes more sense. What court/judge will allow a ride thru if we're already 3 months behind when the bk goes to hearing?

[krielly]

A ride through implies you want to remain in the house. If that's the case, you maintain your payments.

Sounds like you will be surrendering. When your attorney says you may be able to stay in your home for up to a year, he's saying that it may take that long for the forclosure to go through, so you can remain in your house until that happens. No point in making payments on something you are going to allow to go into foreclosure......

[HHM]

I just read a post that advised someone if they knew they were going to walk away from the house post bk, to not sign a reaffirmation and just do a ride-thru. They stressed to make sure they stayed current on their mortgage through the bk process so the court would allow them to do the ride thru.

Can you link that post. I bet your reading of that post is taken out of context, or the advice is a mistake.

In any event, your attorney is correct...if you have NO intention of keeping the house, then you can stop making payments at any time.

[sjr1]

here's the thread

http://www.bkforum.com/showthread.php?t=23085

[krielly]

I think you're referencing this part of the post:

"Well, Joe, I don't know much but I can tell you one thing for sure: if there is ANY possibility that you intend to walk away from the house post-bk, DON'T sign a reaffirmation. And for as long as you intend to live in it during and after bk, keep your payments absolutely current."


The poster is advising NOT to re-affirm if they are not sure they will be able to afford the payments after 7, which makes sense. What I believe they intend to say is to keep current as long as you intend to stay there, and don't want it foreclosed upon. (If you are unsure, keep current or once the 7 is discharged, the bank can pursue immediate foreclosure, as you no longer have the relief from stay) If you KNOW you are going to walk away after your 7, there is no point on continuing to pay. Make sense?

[kl030505]

I can tell you this. Our last payment was Aug 2007. That's when we made the final decision to surrender. We waited to file until a few weeks before the sherrif's sale (Jan 2008) and we are still in the house. We will vacate before May 1st. But, we have had 9 months in the house without a mortgage payment. 4 months since we filed with no mortgage payment. They didn't file a relief of stay until a week after the 341.

Our attorney guided us through the whole process to maximize our time in the house and he was on the money the whole time. I'd follow the advice of your attorney.

[HHM]

That is what I suspected, the context of that other post was a little different. As has already been pointed out, the OP in that other thread was simply "unsure" whether they could continue to afford the payments on the house after the BK, but wanted to keep the house if they could. Thus, the advice was, DO NOT reaffirm, but continue to make the payments (by not reaffirming, the debtor would not be liable for any deficiency on the mortgage "in the event" there was a subsequent foreclosure).

Your situation is a little different, your "intent" is to "surrender" the house, so in that scenario, you can simply stop making mortgage payments and let the foreclosure process run its course.

[sjr1]

kl030505 -- thanks for your post about your experience. I sent you a private message with another question so I don't keeping clogging the threads.

[HHM]

kl030505 -- thanks for your post about your experience. I sent you a private message with another question so I don't keeping clogging the threads.

Please do not ask questions of members via PM. The whole point of this website is for members to SHARE their experience and knowledge which allows members and visitors to LEARN from that experience.

This site is NOT professionally staffed.

[sjr1]

All righty -- here was my question:

Thanks for your info about what you guys are doing with your house surrender. Right now I'm having to convince my husband that it's the best thing to do. The Chpt. 7 is a big enough blow to his ego and letting the house go may be more than he can take, but we are definitely drowning. If I can bring him some figures of people who stay in their house for months with no payment, perhaps he'll come around.

But, with you having extra $ in your bank account now that you haven't been making mortgage payments, how have you kept the trustee from seizing it?

Thanks!

[lrprn]

...Right now I'm having to convince my husband that it's the best thing to do. The Chpt. 7 is a big enough blow to his ego and letting the house go may be more than he can take, but we are definitely drowning.

It is always hard to give up something like a house that we want to keep badly. But it's just a thing. Far more important is not drowning in stress every time the phone rings or the mailman delivers the mail. Things can be replaced eventually. Doing what's best for the family and to create peace of mind - those are far more important than a thing.

What you are making is a business decision, nothing more. Your creditors have no emotion involved - it's best to remove yours as much as possible as well.

But, with you having extra $ in your bank account now that you haven't been making mortgage payments, how have you kept the trustee from seizing it?

Chapter 7 freezes your financial estate on the day you file. Money that comes in after you file (and especially after your 341) is yours to keep as long as it's not an inheritance or other windfall stated in the current bk law.

[sjr1]

I see. Hopefully the 341 meeting happens soon after the filing. I totally agree with everything you say about the house being a thing, and to keep emotions out of it. I have written this whole plan outlining the money we could save, the house we can buy probably in 3 years with the down payment, being in a positive equity state when we buy it, etc.

The biggest thing is that when our business failed this summer, I had to leave my 8 month old baby, who I had been staying home with, to come back to work. I've been working for 7 months now and I'm no closer to being able to be back home with him. If we cut our expenses (which we would by renting - by $1200) I could at least go to part time and then when my husband starts making more commissions I could be a full time mum again.

It's so clear to me, and my heart breaks that it's not as clear to him.

[kl030505]

Oh trust me, it took me weeks to convince my husband to let the house go. WEEKS. he's still not thrilled about it, despite my having very accurate projections of how much we could save if we rented vs owned. But, I put my foot down. We had been making emotional decisions for too long - we waited far too long to file. We should have done it 2 years ago, and waiting was primarily for emotional reasons. I wanted to stop that cycle.

Anyway, as far as extra cash, well, some of it I spent getting utility bills totally up to date, and some I spent on Christmas gifts (not a lot, I think I spent no more than $300 total on all of Christmas), we purchased DH a new car in cash before we filed because his was finally kicked the bucket, so I used $3,000 to buy the new car before we filed so that we wouldn't have to try to do it while in the middle of it. The car was exempt since mine is a lease and not an asset. We had a total in $10K in wildcard exemptions because we were surrendering the house and I think we only used up like $8K.

When we filed, I had spent the money that we had saved from not paying the mortgage for the most part. Not on crazy stuff - necessities and mostly the car. When we filed I think we had like $500 in the bank. The last several months of not making mortgage payments has allowed us to save a substantial amount of money so that we have enough in the bank to offer a landlord 3 months worth of rent as a security deposit and first month's rent up front ($4,000). Which, is what it is going to take to get us into a decent rental around here (and for those of you following my story we have a landlord very interested!). Like a pp suggested, the only thing the trustee cares about is your assets on the day you file. within a reasonable amount, everything after that is off the table for them.

Seriously, it seems your attorney knows what he has doing. I felt very comfortable with my attorney and confident in his abilities. I came here for reassurance and support, but ultimately, I followed my attorney's advice to a T and it definitely didn't hurt us. We are a few weeks shy of discharge. If you think you have a decent attorney, follow his advice.