Being current on mortgage(s) and filing Chapter 7

[RGMLM]

I have read several threads in which people state that you have to be current on your mortgage(s) to file Chapter 7. I do not believe this to be true.

[TBLTZ]

I have read several threads in which people state that you have to be current on your mortgage(s) to file Chapter 7. I do not believe this to be true.

To file it doesn't matter if you are current or not. What matters is if you want to keep the house. If you want the house then you need to be current. If you don't want the house it doesn't matter. If you are late on the mortgage and file the bank will usually file a relief of automatic stay to get the process started of getting you out of the house.

[justbroke]

Why would you not believe it's true? Perhaps you are being confused by what happens when you're not current when filing a Chapter 7.

If you are behind in payments and file a Chapter 7, it is 99.99% likely that the bank will file for a Motion for Relief From the Automatic Stay (MFRS). This is regardless of whether you are intending to surrender the property or not. If you are working out a modification deal, the lender (bank) may still file the MFRS in order to protect their rights.

In some very very remote cases, a person who is behind in their mortgage payments, can actually get their mortgage reaffirmed through a reaffirmation which actually modifies the mortgage to bring them current.

In the end, yes, it's up to the lender, but lenders are not going to just do nothing when a debtor is filing Bankruptcy and the debtor is not current.

So, can you tell us specific about what you are really talking about?

[IBroke]

The question is: Does MFRS equal foreclosure? Especially on properties with a high mortgage and a low value, I don't see a reason why - especially not on the 2nd mortgage. I could be wrong though..

[RGMLM]

Why would you not believe it's true? Perhaps you are being confused by what happens when you're not current when filing a Chapter 7.

If you are behind in payments and file a Chapter 7, it is 99.99% likely that the bank will file for a Motion for Relief From the Automatic Stay (MFRS). This is regardless of whether you are intending to surrender the property or not. If you are working out a modification deal, the lender (bank) may still file the MFRS in order to protect their rights.

In some very very remote cases, a person who is behind in their mortgage payments, can actually get their mortgage reaffirmed through a reaffirmation which actually modifies the mortgage to bring them current.

In the end, yes, it's up to the lender, but lenders are not going to just do nothing when a debtor is filing Bankruptcy and the debtor is not current.

So, can you tell us specific about what you are really talking about?

I was just confused on this subject after reading multiple threads - people should clarify when they make these statements that if you want to keep the house - then you should be current, if you don't want to keep the house then it does not matter.

[want2save]

For clarity, speak to youd lawyer. That is what he/she is for. This forum is made up of individuals doing the best they can. From time to time lawyers chime in which is very helpful.

[justbroke]

The question is: Does MFRS equal foreclosure? Especially on properties with a high mortgage and a low value, I don't see a reason why - especially not on the 2nd mortgage. I could be wrong though..

Nothing equals foreclosure these days. Not paying your mortgage, and even getting a Notice of Default and an actual Foreclosure Lawsuit (Lis Pendens)... doesn't even equal a foreclosure.

I'm still waiting for my foreclosure on my rental property. I haven't paid since January 2008.

MFRS is a good indication that the lender is taking the appropriate steps to protect their rights. Whether an actual foreclosure will occur, is anyone's guess.

What I wouldn't want people to do, is to "plan" that the lender would take no action. On a second mortgage that is totally unsecured (the property is worth way less than the first mortgage), it's unlikely that the lender would foreclose. However, this game shouldn't be played on first mortgages.

Many people actually have private mortgage insurance (PMI) on their first mortgage and it's actually better for the lender to foreclose! They actually lose very very little money, if any.

I was just confused on this subject after reading multiple threads - people should clarify when they make these statements that if you want to keep the house - then you should be current, if you don't want to keep the house then it does not matter.

True, and I wasn't sure what you were asking, but you summarize it correctly.

If you are surrendering your home, it really doesn't matter whether you're current or not.

If you are trying to keep your home, via reaffirmation or ride through, it is absolutely important that you remain current on the home.

[Ann]

My lawyer told me point blank... if you want to keep your home in a chapter 7 you MUST be current on BOTH mortgages!!! My hope is to get through this and be able to offer a lump sum to settle on the second AFTER we are discharged from bankruptcy. I could be dreaming up a plan that may not work but from what I have heard on other boards it isn't impossible to offer 10-20 % of what you owe on the second.

[justplaintired]

My lawyer told me point blank... if you want to keep your home in a chapter 7 you MUST be current on BOTH mortgages!!! My hope is to get through this and be able to offer a lump sum to settle on the second AFTER we are discharged from bankruptcy. I could be dreaming up a plan that may not work but from what I have heard on other boards it isn't impossible to offer 10-20 % of what you owe on the second.

Ours told us the same thing, he stressed this to us. We didn't have a problem with that we had never been late on either mortgage. We never wanted to lose our house, it was very important for us. So I honestly believe if you intend to keep your house you better talk to an attorney. Don't go into bk behind on your mortgage and take a chance losing your house. I have read numberous threads on here stressing how important it is to be current to file a C7 and keep your house.

[liz417]

I was told the same thing...if I wanted to keep the house, I needed to be current before I filed.

[123ABC]

And my lawyer said that it is 100% up to the bank as to whether or not you need to be current. In these times there is no certaintity on anything!!!! Talk to your mortgage company.

I am currently 60 days past due and filed August 6th. My mortgage company is working with me to complete my HAMP modification before discharge.

Also take everything you read in an internet forum as just individual experiences. For somebody to say EVERYBODY WHO WANTS TO KEEP THIER HOUSE MUST BE CURRENT is crazy. You have no idea what everybodies individual circumstances are, especially in these economic times!

[justbroke]

And my lawyer said that it is 100% up to the bank as to whether or not you need to be current. In these times there is no certaintity on anything!!!! Talk to your mortgage company.

Absolutely true. This is up to the creditor who holds the Mortgage/Note to take any action at all.

I believe that in my prior post, I wrote that it is possible to keep your home and be behind in payment. That's if you work out a modification with the lender as part of a reaffirmation (and maybe a reaffirmation is not even necessary). However, I would make certain that the lender is willing to work with you either before or immediately after filing, if you're trying to keep your home. You should be prepared to lose the home to foreclosure if you can't get to a deal.

Also take everything you read in an internet forum as just individual experiences. For somebody to say EVERYBODY WHO WANTS TO KEEP THIER HOUSE MUST BE CURRENT is crazy. You have no idea what everybodies individual circumstances are, especially in these economic times!

In order to protect yourself from the creditor, it is absolutely true that you must be current to keep your home from a legal standpoint. As I wrote above and prior, sure, you can work with the creditor to either reaffirm and/or modify your mortgage inside the Bankruptcy.

However, you have no legal standing to protect you if you are not current.

This is an important distinction for debtors who actually want to keep their home. Here's a repost of what I wrote... I hope that future readers of this thread take head and notice.

In some very very remote cases, a person who is behind in their mortgage payments, can actually get their mortgage reaffirmed through a reaffirmation which actually modifies the mortgage to bring them current.

In the end, yes, it's up to the lender, but lenders are not going to just do nothing when a debtor is filing Bankruptcy and the debtor is not current.

[SANDY075]

I intented to keep my house and current on payments that is why I qualified for CH7 BK. However, I did not reaffirm the mortgage as adviced by my lawyer so in the event that I won't be able to afford the payments, I would still be protected under CH7 BK.
I remember my lawyer telling me that, if you are behind on payments and intend to keep the house, you will file for CH13 since it is a repayment plan. You may qualify for CH7 if you're current on mortgage or if you want to surrender your house depending on the MEANS TEST.

I have read several threads in which people state that you have to be current on your mortgage(s) to file Chapter 7. I do not believe this to be true.

[IBroke]

As I said before, the circumstances and numbers are important. If your mortgages are 100% SECURED by the value of your home and you are behind when you file CH7, you will most likely lose your home.

But here's my question: Why should the lender be influenced in his decision by your CH7 BK-filing? Their secured interest stays the same and the value of the property stays the same - so if it wasn't worth foreclosing on your home prior to your CH7, why should it be afterwards?

Let's say you are current on your first mortgage and behind on your second which is 100% unsecured due to the balance of the first.

Why should the second mortgage all of a sudden foreclose on you after you filed CH7? Their position is even worse than before: The foreclosure is their final straw and the entire money from the sale goes to the first mortgage. IN ADDITION - due to your CH7 - you aren't even responsible for their loss. The debt from the mortgage is discharged. So why should they foreclose?

[justplaintired]

And my lawyer said that it is 100% up to the bank as to whether or not you need to be current. In these times there is no certaintity on anything!!!! Talk to your mortgage company.

I am currently 60 days past due and filed August 6th. My mortgage company is working with me to complete my HAMP modification before discharge.

Also take everything you read in an internet forum as just individual experiences. For somebody to say EVERYBODY WHO WANTS TO KEEP THIER HOUSE MUST BE CURRENT is crazy. You have no idea what everybodies individual circumstances are, especially in these economic times!

Well if a mortgage company has a right to foreclose because you are behind, C7 only allows a stay, as soon as it's discharge they can continue with foreclosure. Personally that isn't a chance most people want to take who intend to stay in their home. Whether being in a modifaction prevents foreclosure I don't know. I do know my attorney who served us well and got us thru this whole thing STRESSED we needed to remain current during this whole process which we have done. If I couldn't keep my payments current on my mortgage after BK I wouldn't have kept this house, but our payments are affordable without all the cc, so, we are doing what BK is suppose to do for you, we are living in a home we can afford and we are paying on time. I don't claim to be a expert, but frankly it seems to me this poster wanted other's experience and this is our experience. I only stated what our attorney told us and what other threads on this site also confirmed. Yes each case is different, but if this poster wants to be safe then they need a good attorney's advice, don't take a chance on losing your home if that is important to you, get current, then file.

One other thing, I have read numberous posts where people literally filed a C13 in order to keep their home, so if being behind on your mortgage is perfectly fine, then why have so many who qualified for a C7 done a C13 just so they didn't lose their homes?