CH7 and Mortgage Arrears...

[sh9730]

Ok first post in this forum...great site!

Im sure this has been answered on this forum...but so far no luck finding it.

Trying to decide between CH7 and CH13....my initial information was that all mortgage payments needed to be current prior to FILING to allow it to be reaffirmed (or not depending on which way I go - reading the sticky's on all this now)...or can it just be made current prior to FORECLOSURE SALE...

I.E. - I am currently 3 payments behind.....if I file CH7 and get the stay..can I continue to negotiate with bank and get either current or on an approved repayment plan to bring it current before they get the stay lifted and sale completed, or prior to discharge of the CH7?

Thanks...

[GWBcasualty]

It depends on your bank, on your loan amount, on the value of your property, on the original loan status (prime? ARM? subprime? do they have the note or not? etc...).

In most cases, if you are significantly upside down, they may try harder to work with you before they go through the FC process, there are posters on this forum that have not been paying their mortgage for 3 years and have still not faced FC.... if there is equity, they will try to steal the house.

[sh9730]

GWB -

Thanks! Hopefully others will have experience. Mine loan is an FHA backed loan from Chase and Im pretty sure they still hold the loan. Ive never rec'd any paperwork that it changed hands and initially they had said they intended to keep it themselves. Balance is 140K and my GUESS (based on listing price of a comp foreclosure a couple houses down) is mine is worth 115K-120K. Not sure if that if that is considered "significantly" upside down to them or not.

Again, I ask all this because for various reasons I would really like to keep the house (I run my biz out of here etc), but I will not be able to be current on the payments before I choose which direction to go (CH7 or CH13). All OTHER aspects of my financial situations lend themselves to a CH7, but I will likely have the ability to complete a CH13 if need be (by this I mean I will pass the means test for a CH7 as of now (cant wait too long though or my new income will kick in), but I will have income increases that will allow me to complete a CH13 if I go that way).

So, I guess what you are saying is the only sure way to keep the house is either be current before filing, or go CH13? And then if I chance it on a CH7, I can TRY to get current or work out an arrangement with them anytime prior to the foreclosure sale? SO, this is all outside of the CH7? That is what I am asking here...is there anything that FILING the CH7 disqualifies me from doing? Other than that I need to decide whether to include the arrears in the filing or not, right?

[GWBcasualty]

GWB -

So, I guess what you are saying is the only sure way to keep the house is either be current before filing, or go CH13? And then if I chance it on a CH7, I can TRY to get current or work out an arrangement with them anytime prior to the foreclosure sale? SO, this is all outside of the CH7? That is what I am asking here...is there anything that FILING the CH7 disqualifies me from doing? Other than that I need to decide whether to include the arrears in the filing or not, right?

Yes. If you are not current on a CH 7, there is nothing stopping the bank from foreclosing once you are discharged (I am not 100% sure if they can get a relief from stay and FC once you are still on CH7).

However, they can't care less about any of us. It's all about $$. So, if you communicate to them that you would like to work something out and keep the house and THEY think that it's more beneficial to them to get payments from you rather than go through a FC that's what they will do.

I have been doing a lot of research and it really depends a lot on the turnaround ratio of the FC in your zip code and your values.
Based on your value, I don't see a significant reason for them to act one way or another, in other words they are not taking a big hit by foreclosing.

You can look at this site http://www.foreclosureradar.com/coverage
Enter your city, click on "trends" and look at the FC activity and the timeline.

If the "time to foreclose" (the time between the NOD and the actual sale) is over 180 days on average, that's a sign that they are willing to listen.
Also important is the FC outcome (how many FC are actually bought by 3rd parties and how many become bank property) and the "time to resell" once the FC is complete.

[sh9730]

GWB - thnks again. I started a new thread as I had some additional information - but basically what I am finally learning is that this is strictly between me and the bank with a CH7 - the BK doesnt really come into play at all (as in they dont care since there is no equity in the house) UNLESS I want to be sure arrears are included in the BK discharge, right? Otherwise basically as long as the bank and I come to agreement and/or they get their money prior to FC, then Im ok as far as the BK court is concerned...right?

Since I live in a non-recourse state, if I file CH7 and dont live up to agreement or for some reason they dont honor the agreement, then I lose the house later. But not much difference in reality since they cant come after me for anything other than the house.

Of course there is the CH13 option and I understand everything related to that option now.....but I getting more comfortable with time that doing a CH7 and keeping the house outside is going to be ok...

Am I understanding this all correctly to best of your knowledge?

Thnks!

[celrelief]

GWB, the foreclosureradar site is great -- do you know of a site that does the same thing for the Southeastern US (specifically GA)? The Atlanta area's been hit hard with F/C's, we finally got our trial modification after not paying for 22 months! BTW, I LOVE your username -- aren't we all?? (GWB Casualties, that is) Thx

[GWBcasualty]

GWB, the foreclosureradar site is great -- do you know of a site that does the same thing for the Southeastern US (specifically GA)? The Atlanta area's been hit hard with F/C's, we finally got our trial modification after not paying for 22 months! BTW, I LOVE your username -- aren't we all?? (GWB Casualties, that is) Thx

Nope... sorry

[GWBcasualty]

the BK doesnt really come into play at all UNLESS I want to be sure arrears are included in the BK discharge, right?
Since I live in a non-recourse state, if I file CH7 and dont live up to agreement or for some reason they dont honor the agreement, then I lose the house later. But not much difference in reality since they cant come after me for anything other than the house.

The BK does not come into play as far as you losing the home.
But it does come into play, to your benefit, in the sense that you will not be responsible for the mortgage regardless of you payment.

In other words, if you catch up or work out a loan mod, and stay in the house you can do it... if it's not worth it, you can just walk away, they can go ahead and FC without hurting your credit or come after you at all. Your credit report after a Ch7 should indicate IIB (included in bankruptcy) next to your mortgage.

[sh9730]

GWB,

Again, thanks so much....my attorney got back to me and pretty much confirms what you say...that the court doesnt care about it at all since there is no value to creditors...so whatever I work out with the bank at any point in the process is fine.

So, I now I have another question (I was going to say one LAST question, but it appears that one answer can lead to another question!).

My lawyer says if I INCLUDE the mortgage in the CH7, that Chase will be reluctant to work with me with the stay in place...(hence their reccomendation that everything be done PRIOR to filing which my plan would be and I would have made the initial payment by the time I file - albeit a repayment plan), but I understand what you are saying regarding the arrears and them being in IIB on my credit report....but from a FINANCIAL standpoint doesnt it work out the same for me if at some point they foreclose since as a non-recourse state they cant come after me for back payments....they only get the house back and thats it.....

But I think what you are saying is from a credit repair standpoint, having it IIB if eventually foreclosed on, is better that having it seperate (and in theory at a later date) from the BK, right?