Question about who are my creditors

[Ann]

Have a question about who are my creditors in filing a chapter 7? I spoke today with yet another attorney (4th and will personally meet with him) and he told me that when you file chapter 7 EVERY person you owe money to will need to be listed. Does this mean my utility companies, cell phone, cable...??? Also he said that even though I am planning to keep my home in 7 the house will still be included in the bankruptcy. I'm confused. I thought the home and cars if paying separate would be kept out... no? Please any input here? Am I misunderstanding him?

[justbroke]

You do not have to include your utility companies (cable, phone, electricity) unless you want to discharge your bills with them. Please note that listing your utility company may cause the utility company to demand a deposit once they create your new utility account!

As for your home... your home is only "included" in the Bankruptcy insofar as you must schedule (list) that you have a home mortgage and then to list what your intentions are. Your intention on secured property (home, automobile, etc) is either return (surrender), keep (reaffirm), or purchase (redeem).

I think you're confusing some Chapter 13 things with Chapter 7 things and what "including" in the Bankruptcy means.

Even if you decide to reaffirm (keep) the home, the Judge may not approve the reaffirmation. This is typically because your State's underlying non-bankruptcy laws allows the sought-after "ride-through". As you may have already read about, a "ride-through" allows you to discharge your liability for the debt, while continuing your current and on-time payments with the lender, without fear of foreclosure or repossession.

I hope this helps.

[music12]

you would include utility companies only if you are behind with your bills to them. if you are current, you do not list them.

you understood correctly: everything including a home/car that you intend to keep is included in the bk petition. the whole process of keeping them is part of the bk process.

[Ann]

What about delinquent property taxes? I still owe about 1900 from 2008. I'm thinking I probably need to be current right? Trying to do a home mod now but that is quite a process and would really like to finish this off before I file!

[justbroke]

What about delinquent property taxes? I still owe about 1900 from 2008. I'm thinking I probably need to be current right? Trying to do a home mod now but that is quite a process and would really like to finish this off before I file!

You need to bring those taxes current or you are going to be in a very bad position if you reaffirm, and then suffer a tax sale after having (perhaps) reaffirmed the debt on your home. This would put you in a bad position. Hopefully a Judge/Trustee would notice that your taxes aren't up to date, before allowing you to reaffirm the debt.

Do you expect to be able to bring the taxes current before filing/discharge?

[Ann]

You need to bring those taxes current or you are going to be in a very bad position if you reaffirm, and then suffer a tax sale after having (perhaps) reaffirmed the debt on your home. This would put you in a bad position. Hopefully a Judge/Trustee would notice that your taxes aren't up to date, before allowing you to reaffirm the debt.

Do you expect to be able to bring the taxes current before filing/discharge?

Here is my situation... Trying to modify the 1st mortgage... have been told you have to be delinquent to be able to help (CitiMortgage advice)... Am currently 58 days past due... I could take the money I was going to pay on my mortgage next week and use that to pay at least 1400 of the tax debt. Since they say I need to be late to get help that is why I remain delinquent. I was told that they would pay (a possibility) back taxes and put that into the mod. I was waiting for that to happen. They are dragging their feet! I call every day and no one ever returns my calls. This is going to throw a wrench in my timing for filing by the end of the year if something doesn't happen with them real soon! Any advice here?

[justbroke]

Call them twice a day until they help you. Seriously, the loan modification process is a long and hard fought road. Usually, in order to get a modification, the taxes and all other assessments must be up to date. The lender will usually bring these current and roll them into your new mortgage/note.

You need to plan this, of course, and insure that what you want to do will work in the end. If you are upside down on the house, why even try to protect it? (That's a question I ask everyone trying to save their home when they are ready to file bankruptcy.) Make sure that the decisions you make are business decisions and not "personal" decisions.

Since you now tell me you're not current on your mortgage, I wouldn't recommend paying the tax bill. You need to think about your end game and your worse case scenario. My personal opinion is that you now put yourself in the position where only a modification is going to help you out of this situation... unless you surrender the home in Bankruptcy. But again, I ask that you do the math and make sure this makes financial sense -- that is to get a loan modification and to keep the home.

[PdxDavid]

Here is my situation... Trying to modify the 1st mortgage... have been told you have to be delinquent to be able to help (CitiMortgage advice)... Am currently 58 days past due... I could take the money I was going to pay on my mortgage next week and use that to pay at least 1400 of the tax debt. Since they say I need to be late to get help that is why I remain delinquent. I was told that they would pay (a possibility) back taxes and put that into the mod. I was waiting for that to happen. They are dragging their feet! I call every day and no one ever returns my calls. This is going to throw a wrench in my timing for filing by the end of the year if something doesn't happen with them real soon! Any advice here?

We have a mortgage through Citi as well. We called a couple of times while we were still current to get help and were told they could not help us. So, we quit paying. We made our last payment in May. We were contacted a couple of times after that in June and July and they still could not help us after giving them financial info. About 2 weeks ago they called again and, although nothing has changed financially they are now willing to put us in to a 30yr fixed at 5% first payment due in October.

Also, before any of this happened they had refunded our entire escrow account. Then when taxes came due they paid the 2400 and made it into a side loan at the same interest as our primary. We had to pay double escrow payments for a year.

Good luck

[Ann]

We have a mortgage through Citi as well. We called a couple of times while we were still current to get help and were told they could not help us. So, we quit paying. We made our last payment in May. We were contacted a couple of times after that in June and July and they still could not help us after giving them financial info. About 2 weeks ago they called again and, although nothing has changed financially they are now willing to put us in to a 30yr fixed at 5% first payment due in October.

Also, before any of this happened they had refunded our entire escrow account. Then when taxes came due they paid the 2400 and made it into a side loan at the same interest as our primary. We had to pay double escrow payments for a year.

Good luck

Thanks for the info. Anyone that has Citi as their mortgage company knows exactly where I'm coming from. Two days ago a rep in the loss mitigation department told me that if you are current they (Citi) have really no reason to help since they see you are making those payments! Of course they have no clue as to how we must scrape and scrimp just to pay. Now, I know I signed for this debt and I take full responsibility for it but if I need help all I'm asking is for is really a slight mod on my loan. Even if all they do is take all the back late fees and add them at the end that would help. At least I would be current. As far as an escrow? I have none. I pay my taxes on my own and honestly I DONT like it that way! I would much rather just have them build it into my payment. It has always been a struggle to come up with that lump sum 2 times a year and I'm always late but this is the first time in 10 years I would really be delinquent. Delinquent in a sense that I have to pay through my county now and not through my local town. I hope all of you who read this do not think of me as being ignorant here. I NEVER thought I would be having to deal with this. If you don't mind me asking how much is your separate escrow account payments from Citi? Thanks for the input!

[PdxDavid]

If you don't mind me asking how much is your separate escrow account payments from Citi? Thanks for the input!

It will depend on how much your taxes are. My taxes are/were 2400/yr and it was about 220/mo for the escrow account on top of the regular loan payment. It definitely was better for us paying it monthly instead of all at once.

If they do a mod you might inquire about setting up an escrow account. One thing to keep in mind is that you may have to put a full years taxes to start the account. Just like at closing on the house.

I also would agree with justbroke. If you are too far upside down in this house it may be better to let it go and get a clean start. You don't want to be hanging on to a house that is not worth what you owe on it. It is bad enough when we have cars that are upside down when you drive them off the lot.

[Ann]

It will depend on how much your taxes are. My taxes are/were 2400/yr and it was about 220/mo for the escrow account on top of the regular loan payment. It definitely was better for us paying it monthly instead of all at once.

If they do a mod you might inquire about setting up an escrow account. One thing to keep in mind is that you may have to put a full years taxes to start the account. Just like at closing on the house.

I also would agree with justbroke. If you are too far upside down in this house it may be better to let it go and get a clean start. You don't want to be hanging on to a house that is not worth what you owe on it. It is bad enough when we have cars that are upside down when you drive them off the lot.

First mortgage balance is $198,000... Second mortgage balance is $69,000... Homes sell for around $190,000-$200,000 in my area... am I really that far gone to save this? Or at least want to save it?

[aljohnson007]

My opinion: Let it go and don't pay the taxes. It will be a long time before they can forclose and filing Ch7/13 will give you some more rent free time.

[HakunaMatata]

Ann-

Have you looked at recent sales in your city? Are there any REO properties on the market? How do these values compare to your perceived property value? As your "neighbor", I honestly don't think we've bottomed out yet. I expect to see values further decrease in our county. I live in a very small, formerly highly sought after city. Foreclosures are new my tiny city. I've been watching numbers (focusing on REOs and bank-approved short sales) and it's shocking. Values have been steadily dropping. This has been a wake up call for me. The investments we thought we made years ago are no longer profitable investments.

As Justbroke said, make sure you're making a business decision, not a "personal" decision. I know this is challenging for many. Homes often aren't exclusively perceived as business ventures as there is embedded personal attachment. It's important to project into the future. BK offers a life jacket and you don't want to remain underwater for years to come. The possibility may exist that you take the life jacket now, free yourself of your potentially underwater property positioned in the deep end, tread water in the renters' market, and when your credit/finances improve...begin anew in shallow (real value) water.

[Ann]

Ouch... I hate hearing this but I did ask for your opinions and I do appreciate it. Yes, of course it is a personal attachment. I have a child that still needs to finish school out here. Keeping my home is a major priority for me. Honestly if it were not for that I would say forget it. My case is different in the fact that renting in my community would be more expensive than my house payment (even without the loan modification) to keep my child in a school he wants to finish out in. I hope everyone can see my point. Is it a BAD business decision? Probably but when I can unload all the other debt I think it will be doable at least until he finishes school out here.

[justbroke]

It depends on when your child finishes school. If it's within 5 years, renting the home you own (which is what you're doing... just throwing money away), may be a bad business decision. However, if your child is very young and you'll be there 10 years, and a market projection shows you'll be above water... this may be the same as "renting" for 10 years, but eventually being above water again.

As posted, this should be a business decision and you should work the numbers. Your rental analysis is one of the reasons that you can use to judge your decision. That is, paying rent on a different place in your "neighborhood" would cost more than the current home.

What I wouldn't want to see you do, is to reaffirm the debt, and then have trouble down the road and be upside-down and in real financial distress. You are 35% underwater and that's not a good thing. While I personally don't know the trend for home prices in your area... I can pretty much guess that they are still on the decline.

Now, the business decision amounts to this. First, would you pay $70K in rent over the next 5 years anyhow ($1,167/month)? Second, I would only make this business decision if you can ride-thru... but, alas, riding through puts you in jeopardy with the second mortgage holder if and when the home starts building equity! If you're in California, and they are purchase money loans, you really have no financial impact because California has the non-recourse loans. (However, this is only for purchase money loans. For other readers, there may be other States that offer this non-recourse on purchase-money loans for primary residences.)