Question about 2nd mortgage and negotiating a much lower payoff

[bk2011]

Filed CH 7 2/15/11, 341 meeting 4/7/11, discharge scheduled for 6/6/11

Hello,
We are doing everything possible to stay in our home. We have a 1st and a 2nd mortgage on our property and of course the house is not worth the 2 loans.

We contacted the 2nd mortgage company about negotiating a payoff of the 2nd mortgage because they would get very little if any money at all if we walked away from our house. They appraised our house and realized their situation and thankfully are willing to negotiate a lower payoff.

My question. After we negotiate a payoff, can I use our ROTH IRA money to pay it off? I have read other posts that some people say once you take money from your ROTH IRA it is part of the BK estate, and others say it is not because it's exempt and the withdrawal is after the BK filing.

We want to stay in our home and work something out. However, we don't want to lose more money if the trustee can take it because right now it's in a safe exempt place.

Thanks in advance,
Jennifer

[HHM]

If you are discharged, no issue.

How much did you really negotiate that you would have to do an IRA withdrawal in the first place. Just give it some time, save up the cash. The position of the 2nd mortgage isn't going to change. Strictly speaking, the 2nd mortgage shouldn't even be talking to you until discharge.

[bk2011]

Our attorney is talking to the mortgage company's attorney, so I guess that doesn't count as talking directly to the mortgage company ???
I think they are willing to negotiate since we are offering a payoff. They ordered their own appraisal and with that appraisal they are looking at getting 20% of the loan amount in a payoff.

I am confused about discharge and what the status of the loans need to be at that time. So if we negotiate a lower payoff or lower loan amount that doesn't need to take place before discharge?
Thanks again for your reply!
J