SETTLEMENT on 2nd

[CCsAreEvil]

Because a bird in the hand... you know how the rest goes!

The idea that the 2nd will settle for better terms after the BK is a logical one and may be fine in theory, but in practice, anything could happen, and you may or may not get as good or better terms.

So, I'm not looking for advice on whether to settle before or after but on the best way to pay the settlement before the BK and the effects the different payment options will have on my filing.

You are wrong! You do NOT have a bird in the hand. You are filing bankruptcy. You "will" get better terms if the 2nd is already willing to settle. But you are disregarding all the advice on this forum.

Go get a damn lawyer (or consult several) and see what he/she tells you on what you are proposing! You can get back to us on your findings.

[Mensa1]

Mensa, what advantage are you refering to. I don't think anyone will try to cure the default. First mortgage is upside down by $60,000.00 at least. Greentree is the servicer by the way. They are an interesting bunch to deal with.

With 60K in the tank, 1st mtg alone, then it wouldn't matter. I hadn't had specific info about your situation before. What a person wouldn't want to do is to take a property that is severely under h2o and bring it close to the surface; why risk it before filing Bk. Of course tightrope seems intent upon it. More power to him; there is risk that he simply doesn't perceive there, but maybe it will work out for him. Hope so. But it is a little bit like someone asking you a question like: "I am going to run my car into this wall over here, what is the best way to do so...?" Well there is NO good way to do that... but he still wants advice on how to do something that is just plain risky financially, and NOT a very good idea. There are many things that could go wrong there being just prior to filing a ch 7 Bk.

[blondeinmn]

It is probably the fear of the unknown more than anything. Filing bankruptcy and settling with creditors is like a game of poker. Some people are scared by it.

[MrBankruptcy]

If you're planning on filing bankruptcy, any funds, gifts or otherwise goodness of the bankruptcy as a trustee might ask for it back. Sometimes trustees go back two years in transactions. If you're going to do anything I would wait until after the bankruptcy.

[tightrope]

I really see NO REASON why you must settle before BK. Any source of funds you use will be at risk in your BK.

The REASON would be a) me being happy with settlement amount and b) since I would be happy with it now, then why would I want to jeopardize the settlement in the future, as no one can be sure how they would act/react after BK.
Of course, if someone on here is willing to guarantee the same settlement amount following the BK, by placing it in an escrow account, I'm willing to postpone settling.

And what exactly does that bold statement mean?

[Mensa1]

Here's what the BOLD stmt means:

c) You are happy with the pymt BUT the TT isn't happy with it... and the TT undoes the transaction and disallows your discharge or requires you to pay to the "TT the amount of the settlement.

How you feeling now... besides very much NOT happy.

What you seem not to be acknowledging here is that the TT can do things that aren't conducive to your health or future. So why give them the chance.

The correct answer to this puzzle, as has been eluded to by quite a number of posters, is to WAIT until after discharge, then: 1) the mtg holder will be more motivated since their only recourse is to a 2nd mtg which is worthless, 2) TT will be out of the picture and whatever happens, happens without recourse, 3( tightrope will be so happy with the settlement number that the grin on his face won't fit inside the front door all in one trip.

[albacore44]

If your so intent on setteling pre BK, then i would give up planning to file. As others have told you, you are required on your forms to disclose if you have made any preferential payments. so if you have one the trustee will ask for an equal amount from you to distribute amongst your other creditors. i just had my 341 meeting, and the trustee was asking that direct question. so unless your willing to perjur yourself in front of the trustee, plan on this settlement costing you double.

[Mensa1]

Hey tichtrope; I just read somewhere that another Ch 7 filer who had their 2nd mtg discharged by the Ch 7 filing, and after a couple of yrs the 2nd has offered to settle for 2% of the principal balance owed on the loan. Are you anywhere that number on your pre-Bk negotiations? Didn't think so.

But this should give you an idea of the mindset of the 2nd mtg lender. After the Bk filing and the borrower is discharged, and the house is under h2o, the lender is skrewed BIG TIME. They have a charge off with little value, nothing more.

[blessed]

Can we at least talk you in to wearing your seat belt when you drive into that wall? Is it the same wall that Mensa et al are talking to?

I like that analogy Mensa. lol

[tightrope]

]...you are required on your forms to disclose if you have made any preferential payments. ..[/I]..

As far as I know, preferential payments apply to un-secured creditors only. Otherwise, all of your mortgage payments in excess of $600 would be "undone" to be "distributed" in BK .

Here's what the BOLD stmt means:
c) You are happy with the pymt BUT the TT isn't happy with it... and the TT undoes the transaction ....

On what grounds???

]...What you seem not to be acknowledging here is that the TT can do things that aren't conducive to your health or future. So why give them the chance[/I]..

The only negative I see so far is that, depending on the source and how it's handled, trustee may require that the settlement amount be counted as part of income.
And as you said, if the money is paid directly to the bank, I may not even have to include it in the income.

]...another Ch 7 filer who had their 2nd mtg discharged by the Ch 7 filing, and after a couple of yrs the 2nd has offered to settle for 2% of the principal balance owed on the loan. Are you anywhere that number on your pre-Bk negotiations? Didn't think so..

Others may not care, but I'm not willing to have this weight around my neck for 2 years or even 6 months. So, if I'm happy (key word) with it, I'll take it.

And as far as settling their 2nd before vs after Ch7, could those who actually done so chime in with their experience and percentages?
2% is a nice number, but how common is it?

[momofthree]

I have to admit that fear of the unknown is what caused us to file a chapter 13 rather than a 7. That way we were guaranteed that our 2nd goes away. We offered them a settlement of 15% before we filed. They verbally agreed to it, asked us to fax over docs to them, and then reneged on the deal. I don't trust them as far as I can throw them, so now they get nothing from us.

I'm a play-it-safe kinda gal though, and we are in a position where we are paying out 0% to unsecured debts, so the 13 isn't that big of a deal. Actually, we're paying less into our 13 than what we offered to settle for, so it actually worked out well for us....

[Overmylimit]

chime in with their experience and percentages?
2% is a nice number, but how common is it?

It's not unless you wait it out...

Ok lets do this a different way, you are right anything could happen and they might not give you the same terms later and it sounds like you don't want to take the chance, you might be right. However if the market doesn't go back up you could not give them a dime for 2-3 years after you file...2-3 years of zero..nada..and them sitting on a lien that they can't get paid for....then maybe you get your 2% you're looking for..

Your original question asks how it would effect your BK and it sounds like everyone gave the same advice so take from it what you will

As to the best way for the settlement cash...ask a rich relative would be the fastest way if you have the means although we all advised against it

[Overmylimit]

Hey, overmylimit, I was wondering if being behind on your second caused any problems with filing a chapter 7 and keeping the home. Did you state your intentions as to keeping the home. Any pitfalls I should know about.

No no problem so far, I told the Trustee I was keeping the home. I am just waiting for the 60 days to be up.

[Apocalypse]

One other thing: If your payment amount helps you pass the means test, you will lose that. I can't think why it would be beneficial to do it BEFORE BK. I think you should do it after.

[nichole04]

I plan to file ch. 7 in April and I will be offering my 2nd mortgage settlements after bk discharge. I just got a tax refund and my lawyer advised me to put it into an IRA account and I plan on taking it out after my bk is closed to settle with the 2nd mortgages. I too wanted to settle before filing but my lawyer strongly advised me against it before the bk so I am following his advice.