Partial Claim and Ch 13

[fluffy]

Due to illness we got several months behind on our mortgage. When I called our mortgage company when we first realized we were going to have problems they said they could not talk to us until we were 2 months behind. When I called back after getting 2 months behind, they said to send in a hard ship letter and financial info (income expenses) and they could do a deferral until I could go back to work full time.

They lost the papers and denied us for lack of information. Then I resent everything again. On August 14th they denied us the second time because it was "outside investor guidelines" - no clue what that means.

In the meantime, we contacted an attorney who advised we do a chapter 13 to stop foreclosure and to help with the bills. We don't have a lot of credit card debt ($4K), but we have a lot of medical bills ($40K), and a car ($11K). And of course the house is in foreclosure. We must keep the house. And we can afford it now that I have gone back to work full time (starting this week).

Now I have read about a "partial claim" - is this something that could help us (we seem to meet all requirements, including an FHA loan)? Can we do a partial claim for the mortgage and still file bankruptcy for the other bills? And is there time - despite never getting any communication from the mortgage company, the house is set for sale on October 6th.

[justbroke]

I don't even know what a partial claim is. I don't know if you're referring to a lien strip -- a technique to remove 2nd and 3rd mortgages -- or if you're referring to attempting to cram down your mortgage -- reduce the balance to the current market value.

Why do you say you "must keep the house"? What are the total of all mortgage balances on that home (including arrears)? What is the current market value of that home?

[fluffy]

From what I understand, a partial claim is where FHA pays your arrearages in the form of an interest free loan that must be paid back when you sell the house (or when the mortgage is paid off).

There is only the one mortgage - $175K is owed. Hard to tell what the value of the home is. We bought it last year for $180K (3% down and closing costs were rolled into it), but we also got it under market value because of the condition of the house. We have done some updating to it (mostly elbow grease - probably have invested $300 in materials), and the homes around us are selling in the $200K range. Zillow says it's estimate is $214K. What it will actually sell for is anyone's guess, but home values have stayed steady here.

I don't want to give up the house - we can afford it now that I'm back at work.

[justbroke]

If you are keeping it, why even muck around with "trying" to get an FHA or Fannie/Freddie modification? You're already in foreclosure? Seems like you need to move, and Chapter 13 certainly can help.

However, you need to understand the term (length) and budgetary constraints of a Chapter 13.

With the home set for sale on 10/6/2009, you really need to move on the FHA option, if your loan is in fact an FHA-backed loan. You really need to get going on your decision. You need to know if you even have the runway (time) to stop the sale and pursue the FHA option.