Brief background: Husband & I have a mortgage on a commercial property which is a campground. The campground is operated by a C corp and we are the only stockholders and officers. Credit cards slowly crept up during the recession/business down turn of 2008 & 2009. Due to a natural disaster on 10/25/09 the roads to our area have been blocked and business has been off by 80%. (Two major highways still blocked as of today) We blew through our savings, got turned down for an Economic Disaster Loan thru the SBA.
Business is picking up due to the weather improvement and because one of our major competitors lost their lease and closed. But....Now we're approaching 60 days behind on our unsecured credit cards--including those for the business, personally guaranteed by us. Also, the corporation is behind on the rent to us, and we now owe March & April mortgage payments. Our banker has been working with us...I've been communicating/working with a guy that seems to be understanding.
So here's the question: We've decided to file a Chapter 13 and our lawyer is suggesting rolling the past due mortgage & any late fees into the plan. We have way too much equity in the property to do a 7--and in my understanding a Chapter 13 would help protect the property. Anyway, I pulled the mortgage loan agreement out and a couple of the default clauses have me pretty nervous:
"Death or Insolvency. The death of Borrower or the dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower."
"Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of the Loan is impaired."
So...We sold some toys and we can have the mortgage up to date by the first week in May (to include May)....Not to include late fees. Will they enforce these clauses? Are these standard clauses? One other note--We also live on the property--the corp. provides us with housing as part of our salary as managers. Any insight or experiences would be appreciated.
Business is picking up due to the weather improvement and because one of our major competitors lost their lease and closed. But....Now we're approaching 60 days behind on our unsecured credit cards--including those for the business, personally guaranteed by us. Also, the corporation is behind on the rent to us, and we now owe March & April mortgage payments. Our banker has been working with us...I've been communicating/working with a guy that seems to be understanding.
So here's the question: We've decided to file a Chapter 13 and our lawyer is suggesting rolling the past due mortgage & any late fees into the plan. We have way too much equity in the property to do a 7--and in my understanding a Chapter 13 would help protect the property. Anyway, I pulled the mortgage loan agreement out and a couple of the default clauses have me pretty nervous:
"Death or Insolvency. The death of Borrower or the dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower."
"Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of the Loan is impaired."
So...We sold some toys and we can have the mortgage up to date by the first week in May (to include May)....Not to include late fees. Will they enforce these clauses? Are these standard clauses? One other note--We also live on the property--the corp. provides us with housing as part of our salary as managers. Any insight or experiences would be appreciated.