Modification and chapter 7 bankruptcy

[ilovemyfam]

I am thinking of filing for chapter 7 because of alot of credit card debt. Several months ago we had modified our mortgage because we fell behind and we are now current on our mortgages. We have 4 properties that we had modified but none of them have equity. If we file chapter 7, and want to reaffirm those debts, will they void our modifications. We would like to keep the properties because they create income for us. Anyone who can help on this would greatly be appreciated.

[justbroke]

No, filing shouldn't modify your modifications. (Check the fine print as some do talk about insolvency or filing Bankruptcy. I don't think it's technically legal for them to accelerate the loan due to Bankruptcy, but there are been stranger things in contracts!)

Now, whether the Trustee lets you keep the properties (by first, abandoning the properties from the Estate)... and then the Judge letting your re-affirm them... will be the most challenging part of all of it!

[ilovemyfam]

Thank you for your response. Do you think it will be problem then in bankruptcy with keeping the properties? They have no equity. Wouldn't the trustee allow us to keep them since they do produce income for us? We cannot file chapter 13 because the secured debt on all our properties is more than 1 million and we have no assets and tons of unsecured debt that we cannot pay and fearful of lawsuits for all these credit card debt.

[justbroke]

Thank you for your response. Do you think it will be problem then in bankruptcy with keeping the properties? They have no equity. Wouldn't the trustee allow us to keep them since they do produce income for us?

Just depends on many factors. Remember, that for re-affirmations, the Court (and technically your lawyer) must ensure that any secured debt that you do re-affirm, isn't and won't become (at least not in the foreseeable future) a burden on you. That's the questionable part.

But, you are running, technically, a business. Renting housing is a business and the Trustee may be persuaded that you need the units as income to survive. (Pure speculation on my part.)

I could have kept mine, but I was in a Chapter 13. For a Chapter 7, the Trustee will probably need to first abandon their interest in the properties, and then you'd have to come up with a good reason to keep them (in order to re-affirm the debt).

We cannot file chapter 13 because the secured debt on all our properties is more than 1 million and we have no assets and tons of unsecured debt that we cannot pay and fearful of lawsuits for all these credit card debt.

I know what you mean. However, I went into a Chapter 13 to save my investment property at first, but ended up surrendering it because my tenants stopped paying after they saw the foreclosure notice. Then, I tried to rent it out in a down market and it was just a mess. So... I surrendered it, but still own it today. They haven't foreclosed yet.