Honestly have no idea which thread to put this under

[Overmylimit]

Ok I met with my Lawyer yesterday, it was my signing day. I signed all the paperwork and we (paralegal) went over everything to make sure all was included. As many of you know I will be filing chp 7 for personal and business debt. I also paid them in full (I sure could have used that $$) then I met with the Lawyer. He said he looked thru all my paperwork and didn't see anything that would throw up a red flag so we would file on Monday.

Then we talked about how it was all going to work and what to expect at the hearing. I have met with him several times and he really seems to know his stuff, I met with many others before him and he just puts me at ease. So its going along and then he goes into a whole other area I wasn't expecting. We started talking about chp 13 switchover. He said we still had some time before we really had to file since only one creditor so far actually has filed for judgement and that the laws were changing rapidly. His line of thinking was to have my main mortgage loan possibly being crammed down. I owe 177k on the 2nd and 635k on the 1st. The house is worth 350k right now.

He said to wait another 30 days to see what happens with the BK bill/s that have come up and what prevails from them then we could make the call at that time whether to proceed. Or possibly file the 7 then go behind it with a 13 "aka chp 20" however he wasn't to optomistic about doing that as far as modification goes. See here is the scenario 796k owed on my home, 136k on two rental properties and 430k in unsecured.

I know the limits for 13 and I don't qualify. So what is he thinking at this point? He also had a 3rd option involving a 13 but at that point my mind was spinning and I wasn't sure what to think. I would love to wipe the unsecured away and cram down my home for sure but I don't think I even qualify does anyone know something that I am missing here?!?!

[keepmine]

He's referring to Senate Bill 61. The bills sponsor {Sen. Durbin} has tabled it at the request off President Obama until work on the stimulus package is complete. At that point the bill will be considered with the Presidents backing.
When the bill was first introduced, the wording indicated that only subprime or nontraditional mortgages would qualify for modification by bk judges.
I guess it won't hurt to wait and see how this legislation plays out.

[Overmylimit]

My mortgage on my primary home was a stated income loan, so I guess that would have been a subprime type loan. I still don't see if I am over the limits for chp 13 how can they even think about going that way?

[HHM]

The senate bill waives some of the debt limit issues with a 13 as it regards the cram down (but the debt limit overage must be related to the debt of the primary residence, e.g. you will not be precluded from filing a 13 if the newly created unsecured portion of the mortgage note would put you over the debt limit). Also, I believe the bill is retroactive for cases filed in 2009. So if you file a chapter 13 today, and the bill becomes law in October, you can still modify the mortgage (but don't quote me on that last fact, it is what I have "heard").

The reason a chapter 20 probably would not work for the cram down is because you need a discharge of the 13. If you file chapter 7 first, you are precluded from receiving a discharge in a 13 for 4 years.

I don't recall your full story, but if you want to keep the house, have that much negative equity and can afford to pay the new mortgage and your expenses (and you are not already over the 13 debt limits), you should consider the 13.

[Overmylimit]

Thats my wonder is I think I am already over the limits for a 13. I have 430k in unsecured I thought you could only have 336k?

[HHM]

Correct, the unsecured debt limit for a 13 is $33xK. If you are already over that (exactly how you are over that limit?) then you may be precluded from filing a 13.

However, you can still "file" a chapter 13 and be over the debt limit and see if anyone objects, but that would be very risky because the court can object on its own behalf. But I have seen a case or two where the debtor was over the debt limit but got their plan confirmed, but the situation was very unique and unsecureds were getting paid far more than they would receive in a chapter 7.

[Overmylimit]

See this is why this doesn't add up to me, I don't want to wait extra months for a possibility that might not happen...in the meantime I keep piling on Judgements.

[SobStory]

Overmylimit, just want to say: do not assume that a stated income loan is a subprime loan. I too have a stated income loan, but we were not classified as subprime i.e. we had good credit when we took the loan. This is bad for me. I have a Countrywide loan and they said that I am not eligible for loan modification under the Hope Program unless I have either (1) subprime credit when loan was written OR (2) payoption ARM with negative amoritzation. I had good credit to start and did a payoption ARM but the interest was terrible on the neg amort product so I didn't take it. So no soup for me.
Anyway, while some stated income loans are subprime not all are.

[Overmylimit]

Good point I just don't think this plan will work for me anyway, it just seems like waiting the extra time is just spinning our wheels. So no soup for me either.

[catleg]

I take it that you don't want to give up on the house in the 7? Because keeping it means you never build up any equity and unless you can renegotiate the mortgage terms it means facing this problem all over again down the road.
Maybe if you can line up a good rental ahead of time it would give you the confidence to let go of the house as part of the 7. I can't see getting tied up in a 13 unless you really, really love the house. Then in a year or two once you're discharged you should be able to get a mortgage somehow.

[Overmylimit]

I'm not a very emotionally attached person to real estate but my Wife....my kids grew up in the house and we upgraded and added on to no end now its incredible, I would probably face Divorce if we had to leave