How do I keep my home in Ch. 7???

[Sixfoot9in]

Hello,

We are filing for Chapter 7 bankruptcy because we are about to lose 50% of our income through a job lay off on Aug 31st. I would like to know how we can continue to live in our home.

We paid $237,000 back in 2005 and our house is now worth around $135,000 according to Zillow. Mortgage is an IO with a 2nd. We are currently at the point of filing where we need to reaffirm the mortgage or surrender the property. I tried to get loan modified through Litton Loan, and they sent me back a workout plan that includes a RAISED payment and said they are trying their best and this is their one and only offer.

Our current payment is $906(189,000@5.75%) and $356(48,000@8.75%)....all interest. Taxes and Ins are separate.

Their proposal is 2% interest, 3.33% principal per year /12 months, and tax and ins in escrow. Payment comes to about 970. Plus 2nd @ $356.

I have sent in my proposal which asks to lower principal down to $135,000 and keep same terms, which would reduce our payment to about $600. Is this too outrageous to ask for?
I would also like to know if we need to reaffirm our loan for Litton to work with us in Ch 7, or surrender the property and hope they modify our loan or what. Basically, how would I be able to say on paper that we want to reaffirm but under different loan conditions?
Any help would be greatly appreciated!
Thank You

[goodlife4524]

Originally Posted by Sixfoot9in

Hello,

We are filing for Chapter 7 bankruptcy because we are about to lose 50% of our income through a job lay off on Aug 31st. I would like to know how we can continue to live in our home.

We paid $237,000 back in 2005 and our house is now worth around $135,000 according to Zillow. Mortgage is an IO with a 2nd. We are currently at the point of filing where we need to reaffirm the mortgage or surrender the property. I tried to get loan modified through Litton Loan, and they sent me back a workout plan that includes a RAISED payment and said they are trying their best and this is their one and only offer.

Our current payment is $906(189,000@5.75%) and $356(48,000@8.75%)....all interest. Taxes and Ins are separate.

Their proposal is 2% interest, 3.33% principal per year /12 months, and tax and ins in escrow. Payment comes to about 970. Plus 2nd @ $356.

I have sent in my proposal which asks to lower principal down to $135,000 and keep same terms, which would reduce our payment to about $600. Is this too outrageous to ask for?
I would also like to know if we need to reaffirm our loan for Litton to work with us in Ch 7, or surrender the property and hope they modify our loan or what. Basically, how would I be able to say on paper that we want to reaffirm but under different loan conditions?
Any help would be greatly appreciated!
Thank You

Have you talked to your attorney? We just filed Chapter 7, but we didn't have the issue with the property being worth that much less than we owe on the 1st & 2nd combined if at all. Anyways, as long as you are current on the 2 mortgages you don't have to reaffirm at all, just keep paying. At least in Colorado that's all you have to do. Just checked our credit report last night (free because of the negative items) and 1st mortgage with Aurora Loan Services is not showing anything negative at all and 2nd mortgage with Citimortgage is showing at 'Chapter 7' but still shows that we are paying it. Neither was reaffirmed.

[MomOf1]

Originally Posted by Sixfoot9in

Hello,

We are filing for Chapter 7 bankruptcy because we are about to lose 50% of our income through a job lay off on Aug 31st. I would like to know how we can continue to live in our home.

We paid $237,000 back in 2005 and our house is now worth around $135,000 according to Zillow. Mortgage is an IO with a 2nd. We are currently at the point of filing where we need to reaffirm the mortgage or surrender the property. I tried to get loan modified through Litton Loan, and they sent me back a workout plan that includes a RAISED payment and said they are trying their best and this is their one and only offer.

Our current payment is $906(189,000@5.75%) and $356(48,000@8.75%)....all interest. Taxes and Ins are separate.

Their proposal is 2% interest, 3.33% principal per year /12 months, and tax and ins in escrow. Payment comes to about 970. Plus 2nd @ $356.

I have sent in my proposal which asks to lower principal down to $135,000 and keep same terms, which would reduce our payment to about $600. Is this too outrageous to ask for?
I would also like to know if we need to reaffirm our loan for Litton to work with us in Ch 7, or surrender the property and hope they modify our loan or what. Basically, how would I be able to say on paper that we want to reaffirm but under different loan conditions?
Any help would be greatly appreciated!
Thank You

Six Foot,

Good luck trying to get Litton to lower your principal, don't think it is going to happen. I also am curretnly in the bankruptcy process. Have you thought of filing a chap 13 instead? If you did this you could write off your second and then just pay a fraction of your credit card bills. Your first would stay the same. Which if this is a fixed by the way you have really great terms. I had an ARM and it reset last year to 8.25%, the loan amount is the same as your's and my property too is only worth $135K according to the BPO that Litton ran on my house.

I would be interested in how you file since our circumstance's are similar. I had originally thought of filing chap 7, but all that will do is wipe out my credit cards. I am leaning towards a 13 since this will not only wipe out most of my credit but also wipe out my second.

Good luck.

[sammyt74dp]

Sixfoot,

Do you have Unsecured Credit Card Debt? You have an exemption for you home in Chapter 7 unless you had alot of equity. But you have negative equity, so the Trustee has no reason to take your home and sell it. But the 2nd Mortg is not included in Chapter 7 because it's secured I think. Check with your attorney on this one.

[MomOf1]

Originally Posted by sammyt74dp

Sixfoot,

Do you have Unsecured Credit Card Debt? You have an exemption for you home in Chapter 7 unless you had alot of equity. But you have negative equity, so the Trustee has no reason to take your home and sell it. But the 2nd Mortg is not included in Chapter 7 because it's secured I think. Check with your attorney on this one.

The second is not included in a chapter 7, only in a 13. Talking with your attorney will confirm this and help you make the best decision for your situation.

[Sixfoot9in]

Thank you all for your input.

Yes we have a lot in credit card debt which is why we are filing for bankruptcy. We chose chapter 7 because after I get laid off we will not be able to make the payments. We have been trying for 3 years to pay down our debt, but now our income will basically be cut in half.

As far as reaffirming, we would like to stay in our home. If we don't get a loan modification we will not be able to keep up with our payments. If we reaffirm then we will be committing to pay the current amount, which will be impossible. If we don't check "reaffirm" on our bankruptcy filing, then we will have to check "surrender" or "other" and I don't know if Litton will automatically try to reposses the house, or if there is something I can enter to "reaffirm with terms" or something. I don't want to keep paying impossible payments if we are just going to let it go in the end.

Thanks again..

[goodlife4524]

Originally Posted by Sixfoot9in

Thank you all for your input.

Yes we have a lot in credit card debt which is why we are filing for bankruptcy. We chose chapter 7 because after I get laid off we will not be able to make the payments. We have been trying for 3 years to pay down our debt, but now our income will basically be cut in half.

As far as reaffirming, we would like to stay in our home. If we don't get a loan modification we will not be able to keep up with our payments. If we reaffirm then we will be committing to pay the current amount, which will be impossible. If we don't check "reaffirm" on our bankruptcy filing, then we will have to check "surrender" or "other" and I don't know if Litton will automatically try to reposses the house, or if there is something I can enter to "reaffirm with terms" or something. I don't want to keep paying impossible payments if we are just going to let it go in the end.

Thanks again..

The way we did and and of course you should take to somebody in your state was we selected 'reaffirm' but our lawyer explained that is just your intent and you don't have to reaffirm. In general he said they will cut off your online access to your account and may stop sending statements but as long as you keep paying, you don't have to reaffirm. So if you don't reaffirm but keep making payments they can't legally repossess (at least in Colorado). Since you owe more than it's worth, they may be willing to play ball and get a lower guarantee. However, do not, I repeat do not, reaffirm for a loan that's almost twice as much as the property is worth. Then if you do have to let it go they can and very well might sue you for the difference, and you won't be able to do anything about it.

[Sixfoot9in]

Thank you,

I understand that they can come after me if I reaffirm under the current loan terms.

My question is that I have two options to check in my filing....."Reaffirm" and "Surrender." If I check Surrender will the bank immediately start foreclosure proceedings if I miss a payment due to lack of income? Or is there a way to "Reaffirm under different terms?" Or even "If a loan modification agreement is reached, then I will reaffirm."
Like I said I dont want to commit to a new contract under same impossible conditions, nor do I want to just walk away from the house without trying to work something out. Their current "workout" calls for an increased payment.

Thanks again.

[goodlife4524]

Originally Posted by Sixfoot9in

Thank you,

I understand that they can come after me if I reaffirm under the current loan terms.

My question is that I have two options to check in my filing....."Reaffirm" and "Surrender." If I check Surrender will the bank immediately start foreclosure proceedings if I miss a payment due to lack of income? Or is there a way to "Reaffirm under different terms?" Or even "If a loan modification agreement is reached, then I will reaffirm."
Like I said I dont want to commit to a new contract under same impossible conditions, nor do I want to just walk away from the house without trying to work something out. Their current "workout" calls for an increased payment.

Thanks again.

No, checking 'surrender' won't cause the bank to immediately start foreclosure proceedings. I don't believe the bank ever sees your filings. That is just initial intent to the court.

[Sixfoot9in]

Thank you GOODLIFE, MOMOF1, AND SAMMY for your help!

I think what I might have to do is where I can select reaffirm or surrender there is a slot for "other." I might just write in there "Will reaffirm with affordable loan modification." That might tell the court that I am willing to stay in my home rather than just let it go, but under affordable circumstances. This one-time-only offer of an increased payment loan modification is ASSA9. I hope with this filing Litton might be more willing to work with us rather than deal with another vacant, vandalized, and gutted foreclosure after we leave.

Thanks again for your help.