So I talked to the bk attorney's paralegal today...

[BROKEDED]

I have a sale date later this month. I am in arrears on both mortgages and have submitted a modification application to the mortgage servicer but that may take until the day of the sale to be approved or denied and I'm not really counting on it to be approved so I'm preparing for CH7.

However, when talking to the paralegal today and before signing a contract to retain the attorney, I was asking about any additional costs, specifically if the mortgage company asked for the stay to be lifted, if there was any additional fees to respond to that.

She told me that since I already had a sale date that once I filed CH7 the mortgage company would more than likely ask for relief from stay within two weeks of me filing and that it would probably be automatically granted. WHAT?!?!?!

How the heck do I answer this and keep the foreclosure off at least until the BK is discharged?

[despritfreya]

First of all, why are you filing a Chapter 7? Chapter 7's do not help you save a home.

In a Chapter 13 you can "cure and maintain". You cure the arrears over the life of the Plan while maintaining the going forward mortgage payments. While you do this you can continue to attempt to modify the mortgage. Also, if there is no equity in the home after consideration of the 1st mortgage you can strip off (eliminate) the 2nd.

If you do a Chapter 7 you need to deal with both lenders before either one of them forecloses. While I have had success in one case in stripping off the 2nd in a Chapter 7 (by default), there is no real authority to do it therefore the 2nd's lien will pass through the bk unaffected.

Remember, less than 2% of loan modification requests are granted (although it is getting better).

As to timing of the filing of a Motion for Relief in a Chapter 7, my experience has been that it takes about 2 months for the lender to "get its act together". I have, however, seen lenders jump on the issue right away but that is a rare duck. Once the Motion is filed the lender has to wait about 17 days ( give or take a day depending upon the local rule in your jurisdiction) before it can submit the Order granting the Motion. Of course, a Response can be filed which will delay the entry of the Order but, if payments are not current, you do not have a defense in the context of a Chapter 7.

[sac42375]

I am confused, we are filing chapter 7 and not including our house in the bankruptcy. We filed last week and our high mortgage is what helped us to qualify. We want to pursue a home loan modification now, but should we wait until the 341 meeting is over before applying?

[despritfreya]

Your house IS included in the bk whether you realize it or not. It is an asset and it holds a debt. You list all assest and all debts. If you want to keep a secured asset, the house for example, you must continue to sevice the debt.

Chapter 7's do not modify the rights of a secured creditor unless you redeem the asset for fair value, something you would not do for a large mortgage. As a result, if you do not pay the lender either by the terms of the original loan or by an agreement you manage to reach with the lender, you will eventually lose the collateral. This is true for both the 1st and 2nd mortgages. While it is unlikely that the 2nd will foreclose, it has the right to and that is what you have to understand may happen if you do not deal with the 2nd in some way.

Loan modification is a possibility but don't hold your breath. Many, many folks try and few succeed. The lender does not have to agree anything other than the terms of the contract you signed. The reality is, if your lender will not work with you, you will most likely walk away. In the lender's mind, so be it. It will then foreclose and resell the property or tansfer it to Fannie Mae or the FHA and recover its loss. A "private sale" after foreclosure may be at a loss but the lender (Fannie Mae or FHA) can then write down the non-performing loan (your loan) and move on.

It sounds like a Chapter 13 would not work as you have too much house. You cannot afford the "normal" monthly payment which you would have to resume paying the month after filing. As a result, your thought process in filing a 7 and trying to get the lender to work with you appears to be your only option. So go for it with the understanding that if you do not get what you want you can walk away.

Lastly, as in a past post of mine, if you have an HOA you must pay the dues/assessments that come due after your Chapter 7 is filed. Your responsibility to pay those dues/assessments will end if and when the property is foreclosed or you sell it to a 3rd party.

[tcreegan]

I am confused, we are filing chapter 7 and not including our house in the bankruptcy. We filed last week and our high mortgage is what helped us to qualify. We want to pursue a home loan modification now, but should we wait until the 341 meeting is over before applying?

sac, who is advising you? You need some help with this ASAP

Before/after 341 meeting is relatively irrelevant. You need to asking about reaffirming or ride-through.

Tom in Colo