Chapter 7 and late mortage payments

[jmanford]

Filed chapter 7 and not surrendering my house. I intend to stop paying on both my loans after my 341 meeting. My plan is to bring my lender to the bargaining table on a loan mod. My question is will I have to pay the payments that I missed as part of the loan mod? My goal is to save 5k, by not paying, so I can offer them 10% to settle my 50k heloc balance. I have no money. I need to save some first so I can offer a settlement. I know it sounds ridiculous, but I want to keep my house!

[blessed]

Have you talked to your lawyer about this plan? I was under the impression they could foreclose the minute you're late with the first.

[justbroke]

They can foreclose, however, they need to follow the underlying State non-bankrutpcy law for that particular State. For most States, you need to be at least 31 or more day past due, and some are 91+ days. There are also procedures around notice of intent to accelerate, a cure period and the actual acceleration and then lawsuit for foreclosure. (And this varies. In Deed of Trust non-judicial foreclosure States, a foreclosure can happen in 45 days, after the NOD and cure period have ended. In Judicial foreclosure states with a Mortgage, this can take many months to complete a foreclosure.)

I agree with blessed in that you should work this with your attorney. Any strategy you have may backfire on you. If you're going to not pay, you must be willing to give up the home should your strategy not work. Now, as to will you payback the missed payments? Usually the answer is ABSOLUTELY YES. The majority of modifications just tack the missed payments onto the "back" of the loan (meaning they don't correctly amortize). However, the lender does recalculate the amortization as if you had such a loan since the beginning (usually raising your payment amount). The impact could make the payment less affordable. They may only offer a forbearance for a period of time. You just take that chance. (If it's a HAMP eligible loan, you may have a better chance.)

Now will you get a balance reduction as well? Who knows.

[jmanford]

I live in California. I think the lender must contact me first to explore other options besides foreclosure before they can actually start the foreclosure process. This is what I want. Why would a lender take me serious about a loan mode or HELOC settlement if none of my payments on either loan aren't deliquent?