Post BK 7 Lien Adjustment on Surviving Rental Property

[jst4f]

We are planning to go into BK 7 in about 30 days. The real estate market has killed us and we must get out from under the debt. Many of our rental income properties are underwater, and should be abandoned by the trustee and we are barely current on most. Has anyone had any luck getting lien adjustments banks after filing BK 7?

The banks make too much money by short sale or foreclosure to help us pre-BK 7, but our attorney told us that we can try to get adjustments on the liens (former mortgages) after we file BK 7. Does BK 7 somehow adjust the banks ability to make money by foreclosure or short sale?

Has anyone tried and if so what is your story? Thanks

[jst4f]

Wow. 81 views and no stories, good or bad. I'm beginning to believe that you can't get lien adjustments post BK 7 from the banks. I think it is time to talk to our lawyer regarding realistic expectations.... Unless some one tried this. Any and all stories are welcome even if they don't have a happy ending. Thank you

[despritfreya]

You asked so here it goes. . .

You have no lesser or greater chance of getting a lender to modify a loan before or after you file bk. If you qualify under the lender's guidelines then you can modify the loan. If you do not qualify, or the lender simply does not want to deal with you, you will not modify the loan. Your Chapter 7 bk has no impact on this issue.

If you want to force a reduction in the amount owed to the lender then you need to file a Chapter 11. In a Chapter 11 you can modify the rights of a mortgage lender if the lender is not secured by your primary residence (assuming the property is worth less than the amount you owe). HOWEVER, to keep the rental property and force such a modification (called a cram down), the property must be "necessary for an effective reorganization". In other words, it must produce a positive cash flow and that cash flow needs to be utilized to help you fund your Chapter 11 Plan. There are other problems that can pop up such as, what is called, an 1111(b) election that the lender can make. Such is much too complicated to discuss here. If this is something you are interested in you need to talk to a well qualified bk attny in your area.

Des.

[btbeme]

If this is something you are interested in you need to talk to a well qualified bk attny in your area.

Des.

You forgot to include the word "expensive" between the phrases "well qualified" and "bk attny." But we will forgive you on this one since the essence of your posting is otherwise perfectly clear!