Will my foreclosure be discharged in a Chapter 7.....

[we're_still_reviewing]

We are in the middle of filing Chapter 7. Would our foreclosure be discharged in the Chapter 7 if we don't foreclose for another 8-10 months ?

Our lawyer said we need to file first and foreclose 2nd.

Is this correct ?

[Isabel]

I have heard the opposite but an attorney should know. The deficiency is filed after the foreclosure if filed so it would make sense to do the bankruptcy after to cover that deficiency.

Why dont you get a second opinion from another attorney.

[mrange25]

Most lawyers will try to get you to file BK during foreclosure, but it is my understanding that you want to save your bankruptcy filing as a last resort if you plan on giving up the house, maybe even a year after foreclosure.

[helpinNE]

When I filed my chapt. 7 I had the option of reaffirming my mortgage. If I had choosen NOT to reaffirm my mortgage, basically give the house back, the bank would not have gone through a foreclosure because I was giving the house back to them, thus eliminating the possibility for any future lawsuit by the bank.
If your plan is to get out of the mortgage and give the house back to the back, I am not sure why an attorney would tell you to do the BK first and then let the back foreclose. If you have to worry about a possible deficency judgement in the future, then reaffirming your mortgage during the bankruptcy leaves you open for the mortgage company to come after you later. If your loans are nonrecourse anyway, mabye he is trying to give you a longer period of rent free time in the home. I would get some clearification on this before you reaffirm you mortgage.

[Social Apocalypse]

Don't reaffirm your mortgages, then you won't have to pay a deficiency judgement. IF you are in default though, the will foreclose on you when you don't reaffirm. If you are NOT in default, they will not foreclose because they don't have standing. All depends on whether you want to keep you house or not.

[we're_still_reviewing]

Originally Posted by TB98629

Don't reaffirm your mortgages, then you won't have to pay a deficiency judgement. IF you are in default though, the will foreclose on you when you don't reaffirm. If you are NOT in default, they will not foreclose because they don't have standing. All depends on whether you want to keep you house or not.

Hi all and thank you for all the responses.

We are not planning on reaffirming the mortgage. We want to walk away from this home and have no plans on trying to keep it. My lawyer said that because the Mortgage is on the petition that it would get discharged with whatever else is on the petition. I do plan on keeping the car that I am currently paying on. That loan we will reaffirm.

We are not currently in default. Not officially yet. We stopped making our house payments in Oct. So we are really only a month behind at this point. Our lawyer did say that foreclosures are taking anywhere from 18months to two years here.

Thanks again for all your help.

[Social Apocalypse]

Good luck with your case. We are in a similar situation. I almost want to hold off and wait for news on the new Cram Down, (if they ever get it off the ground). I mean, what can they do? KILL ME?

[mollysfolly]

Reviewing since you stated you are walking definately file first so it will be included in bk and will not double hit your credit report. once you file you can sit back and save the cash from the mortgage and pay off your car more quickly once you are discharged. currently one of my homes still has no NOD and I have not payed since June 08 BOA/Countrywide was servicer. I filed bk due to huge deficiency July and was discharged a few weeks ago. They filed for relief of automatic stay and still have not started foreclosure. They denied 3 shortsale offers. I am riding thru on 2 cars and another mortgage and love the fresh start and am now on an all cash basis. Since bk is already your decision do it now and stay in the house rent free as long as possible and perhaps they will even give you some cash for keys, thats what I'm hoping for on my other property.

[MZWITHHOPE]

In CA if you file Chapter 7 if the judge sees you do not intend to keep your house, in other words if he finds out you are late with your mortgage then he may not discharge your bankruptcy and throw you to a chapter 13 and pay some of your debts. If you stop paying after, the house is included in the BK therefore the bank cannot come after your for the deficiency. Please check with your lawyer in your state.

[MyHAMP]

Originally Posted by MZWITHHOPE

In CA if you file Chapter 7 if the judge sees you do not intend to keep your house, in other words if he finds out you are late with your mortgage then he may not discharge your bankruptcy and throw you to a chapter 13 and pay some of your debts.

As far as I know, if CH7 or CH13 depends on your income. If you are unemployed or your income is below the median of your state, you will be going CH7. That has nothing to do with paying your mortgage or your intentions on keeping a house.

What do you mean by "if he finds out you are late with your mortgage then he may not discharge your bankruptcy and throw you to a chapter 13"? do you mean that you have to be current on your mortgage to file CH7?

You do NOT have to intend to keep your house to file for CH7. CH7 is actually not recommended to solve mortgage issues at all. That would be CH13.

[MZWITHHOPE]

It means that if you pass the test (not sure what it's called) Whatever test you need to pass to file for chapter 7 and it includes your mortgage payment but before you are discharge the judge finds out you now have that money available and they do a new budget and you have money left over you may have to go file for chapter 13 instead. I know you do not need to keep your home in your chapter 7. I am talking income vs expenses. I'm not an attorney so sorry if I am not clear. I can only share based on experience.

[MyHAMP]

Originally Posted by MZWITHHOPE

It means that if you pass the test (not sure what it's called) Whatever test you need to pass to file for chapter 7 and it includes your mortgage payment but before you are discharge the judge finds out you now have that money available and they do a new budget and you have money left over you may have to go file for chapter 13 instead. I know you do not need to keep your home in your chapter 7. I am talking income vs expenses. I'm not an attorney so sorry if I am not clear. I can only share based on experience.

OK, so you were refering to the means test. That's certainly a different question.

It also depends what you claim as housing expense. Even though you may not be paying the first mortgage and are planning on leaving the house, you still won't be living for free after discharge. What you just discribed is often an issue if you don't plan on paying your second mortgage but want to use that amount as expense.

[davephx]

Without a mod you in the future will pay full 1st in either Chap 7 or 13. In 13 the delinquent payments are part of the repayment plan but no help on future.

But in 13 can "cram down " the 2nd if underwater.

Chap 7 no help other than short delay as can move to lift the stay on foreclosure sales usually granted. Means test can be used if don't automatically qualify with under median income. High unsecured debt can help as they add 25% after the net worth computation and may help you pass the Means Test.

Note that the budget is based on the Fed or State guidelines not what you actually pay. Is very complicated to figure. It is not like a HAMP budget but allownces for different family sizes for most every item. Different States differ on if they use the Federal Guides or their States or can be optional for either. AZ does not allow the Federal Guides for expenses.

[we're_still_reviewing]

Our lawyer has told us that we pass the means test and we qualify for chap 7. We do not plan on keeping our home. We are going to stay here as long as we can until the bank evicts us. I was just wondering about the timeline as far as the foreclosure happening AFTER we file for chap 7 but our lawyer said since it is included in the petition it will be discharged.

[MyHAMP]

Originally Posted by we're_still_reviewing

I was just wondering about the timeline as far as the foreclosure happening AFTER we file for chap 7 but our lawyer said since it is included in the petition it will be discharged.

That's true. And you won't have a foreclosure on your credit-report.