Should I file now or later or not at all?

[rossfi4141]

I am new to this so any help is appreciated. I have been trying to negotiate my 1st and 2nd for over a year now and finally have been approved for the "Making Home Affordable Program" on my first. We make our first trial period payment this month.
We have lived the past year of our lives in limbo. We stopped paying both our 1st and 2nd mortgages over a year ago and hired a local modification company to work on our behalf. We kept all our other debt payments current and just stopped paying our mortgage. (Kind of Backwards I Know!) After our mortgage company, Taylor, Bean and Whitaker went bankrupt our 1st and second were sold off........ Bottom line, No mortgage payments for over a year. Now that it looks like we are getting our 1st modified We are realizing that there is still no way to pay everything. We want to keep the house now that it will have a good loan.
We are still working with the second mortgage on a modification. I don't know what they will do. I havn't sent a payment to them in over 15 months. There is no equity in the home, infact we owe more on the first than the home is worth.
So my question is...
Do I wait til the mods are final?
Do I file now?

D

[drowning123]

I'm in the process of a modification and I'm planning on filing this month, but I want to walk away from the house.

[readytofile]

I am new to this so any help is appreciated. I have been trying to negotiate my 1st and 2nd for over a year now and finally have been approved for the "Making Home Affordable Program" on my first. We make our first trial period payment this month.
We have lived the past year of our lives in limbo. We stopped paying both our 1st and 2nd mortgages over a year ago and hired a local modification company to work on our behalf. We kept all our other debt payments current and just stopped paying our mortgage. (Kind of Backwards I Know!) After our mortgage company, Taylor, Bean and Whitaker went bankrupt our 1st and second were sold off........ Bottom line, No mortgage payments for over a year. Now that it looks like we are getting our 1st modified We are realizing that there is still no way to pay everything. We want to keep the house now that it will have a good loan.
We are still working with the second mortgage on a modification. I don't know what they will do. I havn't sent a payment to them in over 15 months. There is no equity in the home, infact we owe more on the first than the home is worth.
So my question is...
Do I wait til the mods are final?
Do I file now?

D

If you want to keep your house you can pay your mortgage and do a ride through. Why wait any longer to claim bankruptcy? Although I'd at least wait to file until you've actually made payments on your mortgage, but you might have to be up to date with your payments before filing. You need to talk to a lawyer to find that out. I can't believe you're still in the house and they haven't foreclosed yet. Your lawyer can advise you on your mortgage issues.

[rossfi4141]

We are going to pay for for the next three months durring the trial period to make sure we get approved. I just worry that filing bk now is going to affect my modification.
I think the fact that we have been in the modification process the whole time and that our mortgages have switched hands has helped us keep it.

[tcreegan]

Hello rossfi4141,

Lots of fish to fry here......

If you owe more on the house than it is worth, it will be hard to get the BK court to approve a reaffirmation of the debt (you stay in the debt after the BK)

Having a modification in place b4 the BK filing, and being current on the payments, may allow you to do a "ride through" The debt is discharged in the BK, but you keep making payments and stay in the house. If things change in the future, you can walk away from the house. This is the best situation.

After you sign a loan modification, tell your lender you are filing BK but plan to stay current on the payments. See if they shrug or have a heart-attack.

Not sure what will happen with the second mortgage. It may be discharged and a lien remain on the house but get some good advice on this.

Final answer:

Sign an affordable loan mod b4 the BK and try to "ride through" the BK with it.

As always, I am not a lawyer, I don't even portray one on TV...

Tom in Colo

[OhioFiler]

I am new to this so any help is appreciated. I have been trying to negotiate my 1st and 2nd for over a year now and finally have been approved for the "Making Home Affordable Program" on my first. We make our first trial period payment this month.
We have lived the past year of our lives in limbo. We stopped paying both our 1st and 2nd mortgages over a year ago and hired a local modification company to work on our behalf. We kept all our other debt payments current and just stopped paying our mortgage. (Kind of Backwards I Know!) After our mortgage company, Taylor, Bean and Whitaker went bankrupt our 1st and second were sold off........ Bottom line, No mortgage payments for over a year. Now that it looks like we are getting our 1st modified We are realizing that there is still no way to pay everything. We want to keep the house now that it will have a good loan.
We are still working with the second mortgage on a modification. I don't know what they will do. I havn't sent a payment to them in over 15 months. There is no equity in the home, infact we owe more on the first than the home is worth.
So my question is...
Do I wait til the mods are final?
Do I file now?

D

Some people have filed a Chapter 7 and negotiated a payoff on their 2nd for pennies on the dollar. The 2nd mortgage holder has no recourse if you stop paying them. If they were to file a foreclosure action the 1st mortgage holder would receive all of the proceeds of the sale and the 2nd holder would be stuck with nothing except legal fees.

If I were in your situation, I would file the C7 then bully the 2nd mortgage holder into a settlement.

[Pandora]

We are going to pay for for the next three months durring the trial period to make sure we get approved. ....

If you're doing HAMP, please be aware that most trial payments/plans are much much longer than the 3 month "requirement" - although it does state "only" 3 months are required, you may find that if you stop paying your trial payments after that 3 month window, your package may sit on the back burner. Its unfortunate, but true. It took us roughly 8 months start to finish before approval and all trial payments were made, but there are many that are much longer than that, upwards of a year or more.

In-house mods seem much easier to obtain as there are no trial payments and many mimic HAMP in terms.

Best of luck to you!

[backtoschool]

Some people have filed a Chapter 7 and negotiated a payoff on their 2nd for pennies on the dollar. The 2nd mortgage holder has no recourse if you stop paying them. If they were to file a foreclosure action the 1st mortgage holder would receive all of the proceeds of the sale and the 2nd holder would be stuck with nothing except legal fees.

If I were in your situation, I would file the C7 then bully the 2nd mortgage holder into a settlement.

This is true to a point, but a lot of people do not have the stomach for the constant threat of foreclosure, especially since after bankruptcy, there will be no recourse legally if the 2nd mortgage holder decides to foreclose. There are many instances where the 2nd mortgage holder is foreclosing just to make a point and set precedence.

As with anything ymmv.

[OhioFiler]

This is true to a point, but a lot of people do not have the stomach for the constant threat of foreclosure, especially since after bankruptcy, there will be no recourse legally if the 2nd mortgage holder decides to foreclose. There are many instances where the 2nd mortgage holder is foreclosing just to make a point and set precedence.

As with anything ymmv.

I can't imagine a 2nd mortgage holder pursuing a foreclosure simply to make a point.

There are remedies post bankruptcy just as there are remedies pre-bankruptcy. The mortgage holder must prove his case. Foreclosures aren't summarily granted.

My mileage varies. ;-)

[Cristo]

I got a HAMP mod with BofA in March. If you can do it I would recommend getting the mod finalized first, since you are already in the trial payment phase. After it becomes permanent you can file and they will not be able to take it back from you if you have signed documents back from them. It usually takes a month or two to get those back after it becomes permanent.

If you are sure you are going to file BK, then start paying the trial payments and stop paying the credit cards. Your credit is already probably hurt if you have missed mortgage payments anyway.

One BIG word of caution. If you are over the median income for your state, make sure you can pass the means test with your reduced mortgage payment or you may screw yourself out of a chapter 7. That's what happened to me. I waited to file after I got my mod and the lawyer who told me CH 7 no problem, then said well, with your new payment you now have too much disposable income for a 7 and have to do a 13!! I saw a bunch more lawyers trying to find a way into a 7 and could not do it.

So, bottom line, see a lawyer, see more than one.....most of them don't understand modifications so if you are over the median income have them do the means test with and without the reduced payment. You can also use NOLO's on-line means test.

Best of luck.