Ch 13 and Home mortgage

My bankruptcy attorney is on vacation for next 2 weeks, I am filing Ch 13 to help pay mortgage arrears that accumulated during my layoffs in 2017 and 2018.

I have written the mortgage servicer and asked for either a repayment plan for the arrears or to modify current mortgage. I sent letter USPS and Registered USPS 2 times and the servicer failed to reply.

The servicer has sent a notice to cure and is returning monthly payments (money orders), my bankruptcy attorney said I can file a Ch 13 for the arrears and that I must keep my monthly payments current. Since he is out of his office I decided to ask this question here, the mortgage servicer continues to return payments I assume I keep sending them and when returned keep them along with the letter until the Ch 13 is approved then send all the payments that have been returned to the mortgage servicer.

Would my thinking be correct?

Thank you,
Gene

You should speak to your attorney when he returns.

ggehl said:

I assume I keep sending them and when returned keep them along with the letter until the Ch 13 is approved then send all the payments that have been returned to the mortgage servicer.

Would my thinking be correct?

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Not necessarily. When you file bankruptcy you file against all your debts, not just the mortgage. When you file Chapter 13 you will have payment plans for all your debts and the money you have gotten back from the lender might not be the same payment allocations.

As hard as this may sound I have no car payment no credit cards no personal loans. I was laid off from work for a total of. 12 months between 2017-2019

became late with mortgage payments used up all my savings to keep up with mortgage during that time but eventually had to accept a job for less than what i was making prior and a divorce at the same time

so the only debt is the house and the arrears like I said mortgage service does not return calls from me or my lawyer apparently does not want to modify mortgage also.

ggehl said:

apparently does not want to modify mortgage

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What you've described happens in many Ch. 13 BKs, but the lender sings a different tune when a person files a Ch 7 BK.

Talk to your lawyer when he/she returns.

In the interim, relax and avoid communicating with the lender.

If any communication is required with any of your creditors, that is your attorney's job.

The way the lender sees your efforts currently makes them think you're desperate, as in YOU need them.

They need you, especially your money.

If a Ch. 7 BK is filed, lenders usually will be begging YOU to reaffirm.

Finally, there is a great risk with any CH. 13 BK.

There is no risk with a CH. 7 BK.

Relax, allow your attorney to return, make an appointment to discuss amending the filing to go CH. 7 BK.

Best of luck to you, mate, you've been through quite a bit.

Here's hoping things get better for you real soon.

ggehl said:

so the only debt is the house and the arrears like I said mortgage service does not return calls from me or my lawyer apparently does not want to modify mortgage also.

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The lender won't do a thing for you until you actually file your petition with the court. At that time any attempt at foreclosure will be stayed and the court will compel the lender to accept a payment plan (Ch 13). If you file Ch 7, the loan gets discharged and the lender has the option of foreclosing.

adjusterjack said:

If you file Ch 7, the loan gets discharged and the lender has the option of foreclosing.

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Incorrect.

The debtor has the option to have the debt discharged and the lender will take possession of the home.

However, during the pendency of the CH. 7 BK, the lender is often amenable to the lender REAFFIRMING the debt (upon the trustee's recommendation and with the court's approval).

if that probability comes to fruition, the lender often will renegotiate the loan's terms and conditions under the watchful eyes of the debtor's attorney and the BK referee.

@army judge

In a Chapter 7 the lender holds the cards. If the debtor is in arrears the lender will file a Motion to Lift the Stay, get the stay lifted sooner rather than later and then continue down the path of foreclosing. There is no defense to the Motion since a Chapter 7 is not used to save homes. The intention to reaffirm does no good unless the debtor has the ability to immediately bring payments, late fees, attny fees, and all other costs current. Further, in most jurisdictions you do not officially "reaffirm" mortgages.

It is sad that the only debt OP has is the mortgage. Outside of a Chapter 13 OP can't "force" the lender to work with him/her. Inside the Chapter 13 the debtor can force the lender to accept all post petition payments and the cure of the pre petition default over the life of the Plan.

@ggehl

You have not filed Chapter 13 yet. It appears that until you do, your lender is not going to accept payments unless those payments bring you current. Once you file, the lender will have to accept the post petition payments. As to the money you are now holding (returned money orders) you need to discuss with your attny what to do with the funds. Holding the money in the form of money orders is no different that having cash lying around. The MOs or the cash if you cash them in, are an asset that will have to be listed on Schedule B. Hopefully there is an exemption to protect the money.

Des.

Just out of curiosity and for clarification: Is the lender allowed to communicate/negotiate directly with the debtor if the debtor is represented and the lender has been notified of the pendency of a BK filing?

[QUOTE="Zigner, post: 298549. . . Is the lender allowed to communicate/negotiate directly with the debtor if the debtor is represented and the lender has been notified of the pendency of a BK filing?[/QUOTE]

If the debtor is represented by an attny in the bankruptcy the lender cannot communicate directly with the debtor. However, there are many times where it is appropriate for the debtor's attny to give express consent for direct communication.

Des.

ggehl said:

the mortgage servicer continues to return payments I assume I keep sending them and when returned keep them along with the letter until the Ch 13 is approved then send all the payments that have been returned to the mortgage servicer.

Would my thinking be correct?

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Your post suggests you have not yet filed bankruptcy. Until you can reach your attorney, you should endeavor to follow his/her instructions as best you can. Most attorneys check their email even while on vacation. Is your attorney completely off the grid?

despritfreya said:

Zigner said:

Just out of curiosity and for clarification: Is the lender allowed to communicate/negotiate directly with the debtor if the debtor is represented and the lender has been notified of the pendency of a BK filing?

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If the debtor is represented by an attny in the bankruptcy the lender cannot communicate directly with the debtor. However, there are many times where it is appropriate for the debtor's attny to give express consent for direct communication.

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That's not quite accurate. Ethical rules in every state prohibit attorneys from communicating with a party known to be represented other than through the party's attorney. However, no one else is subject to such a prohibition, so non-attorneys at the lender certainly may legally communicate directly with the OP. Being "notified of the pendency of a BK filing" is not relevant. I can't tell you how many times folks have told me, "I'll be filing bankruptcy by the end of the week," but never actually filed.

[QUOTE="zddoodah, post: 298551,
Ethical rules in every state prohibit attorneys from communicating with a party known to be represented other than through the party's attorney. However, no one else is subject to such a prohibition, so non-attorneys at the lender certainly may legally communicate directly with the OP. [/QUOTE]

Let me re-phrase. 11 USC 362 prohibits the lender from contacting a debtor in bankruptcy - subject to written communications that are pleadings and/or direct negotiations regarding the bankruptcy proceedings only.

If the debtor is represented by counsel in bankruptcy, communication must be with counsel unless counsel (with the client's permission) authorizes direct contact. In fact, in many cases, lenders will send innocent "informational billing statements" to counsel who then sends it to the debtor due to the mortgage lender's fear of running afoul of the Automatic Stay.

Des.