Just want to clarify mortgage question

[isitoveryet]

My husband and I, just had our 341 meeting a week ago and everything seems to be fine with a no asset case. Originally, when we filed, we had expressed our interest in letting our house go in the BK, as we are more than $200k underwater. The attorney had suggested that for the purposes of the means test that we put ourselves in a position that we are "trying to work with our lender to save the home" so when we filed, the notice of intent for the mortgage was to keep the debt. As long as we don't reaffirm the mortgage 1st and 2nd, it will get discharged through the BK and we will not be liable for that debt, right? That's what our attorney said, I just want to make sure... This whole process has been scary and stressful! Can't wait to be discharged.

[justbroke]

As long as we don't reaffirm the mortgage 1st and 2nd, it will get discharged through the BK and we will not be liable for that debt, right?

Exactly. Your attorney is a good planner and has done well instructing you how to get through to discharge without any issues. Your statement of intentions is not binding. What would be binding, is if you actually reaffirmed the debt (and 60 days had elapsed after you reaffirmed).

[MrsDixon]

Just don't sign any reaffirmation paperwork and then you can walk away from your house after discharge.

[isitoveryet]

Thank you so much for your responses! Now if I can just get through the waiting until discharge... ;0

[youngnbroke]

I would just like to clarify this whole thing for myself!! According to the means test, we are above our median income by about $2000...so does the first post mean that if we "try" to keep our house until after filing bankruptcy that this could result in us having a better chance at obtaining the chp 7 even though we were above the median income? I did the means test myself and I didn't include our mortgage payments and by the end of it, it said we failed So i was wondering if we hang on to making the payments (this was going to be our first month of not paying them) we might have a better chance at getting approved?! Then after the 341 meeting, we just wouldn't reaffirm the debt and let the house go into foreclosure?! I'm so confused!! All i NEED is to qualify for the chp 7....a 13 sounds SCARY!

[justbroke]

I would just like to clarify this whole thing for myself!! According to the means test, we are above our median income by about $2000...so does the first post mean that if we "try" to keep our house until after filing bankruptcy that this could result in us having a better chance at obtaining the chp 7 even though we were above the median income?

If you are over the median, it is highly likely that you need that mortgage payment to keep your disposable income low.

I did the means test myself and I didn't include our mortgage payments and by the end of it, it said we failed

Exactly!

So i was wondering if we hang on to making the payments (this was going to be our first month of not paying them) we might have a better chance at getting approved?! Then after the 341 meeting, we just wouldn't reaffirm the debt and let the house go into foreclosure?! I'm so confused!! All i NEED is to qualify for the chp 7....a 13 sounds SCARY!

It's a strategy that you need to work with your attorney on.

[blockhead]

Right, it's what got me past the means test when I was a lot over the median. The lovely high mortgage, taxes and insurance payments - now I'm back to hating them

[youngnbroke]

Ok, at least there's still a bit of hope! I will try to keep up on the payments until we see the atty again!!

[MrsDixon]

When I filed I marked that I was going to keep the house on the statement of intentions. I just never signed the reaffirmation agreement. You'll need the mortgage payment to go through BK and then walk away after discharge if you need to. Just don't sign the reaffirmation agreement.

You don't want a foreclosure and a BK on your report. Just keep making your payments until the BK is over, then walk. If your house wasn't in foreclosure prior to the BK filing it is my understanding (and quite a few people agree with me) that the lender cannot later add the FC. The BK is the end all be all to your credit problems. It would be unfair to add a PR for a FC after the debt wasn't yours anymore.

It will be recorded as a FC to your county and will be in your name but it shouldn't be on your CR.

[youngnbroke]

Helpful tip MrsDixon!!! Thanks! But what does PR mean?! I figured out the other abbreviations..but seemed to be stumped on that one!

What happens after the BK is over...and I decide to walk away? "Technically" it would be a foreclosure either way, it just wouldn't be on my credit report?! That would be NICE! And also...I've read that the pre-foreclosure process starts after the 3rd missed payment, so let's say we file in July and miss our first payment in August. Would it still work that way? Or should I try to keep up on the payments until I'm completely discharged? I still will have to see if we will even qualify for chp 7.

[StartingOver08]

PR = Public Record

[MrsDixon]

PR = Public record.

The reporting stops as of the FILING date. I suppose you could stop paying as soon as you file and then say that you're trying to work out a modification with the lender if anyone asks.

I made my last payments in October and then filed at the end of the month. I do not have any lates on my report. It says "Incl in BK/ Never late".

ETA: You can stop paying anyway because of the automatic stay. No one can attempt to collect from you.

[youngnbroke]

THANK YOU THANK YOU THANK YOU!!

If I said that we were "working on a mod"..would anyone actually investigate that?! We had one done on our 2nd mortgage back in September, wouldn't want to get caught lying! I'll do my best to keep up for as long as we can (or until the lawyer says so) but times are tough right now!

[MrsDixon]

Don't lie. Just make some calls to the lender and see what kind of modification they can offer you. They may not even talk to you because of the BK and that would be fine too. At least you tried to call and wouldn't be lying to anyone.

[isitoveryet]

Just so you know, I had already missed about 5 or six payments when I actually filed. The bankruptcy trustee never asked us about the late payments either. We said we were working with our lender and we actually were but just through phone calls and they took forever to send us paper work to fill out and request the info they needed. They never sent us a notice of intent to foreclose or whatever it is they need to mail you to inform you of the foreclosure process. I wouldn't worry and continue making payments if you intend to walk away. You could be saving the money when you need to move and rent a place.