We were served with Foreclosure papers and are trying to reinstate the loan by paying what we are behind. At about the same time we got an offer from the bank for trial payments under Making Home Affordable. We would like to accept the offer but reinstate our loan first and then file Ch. 7, but still keep our home. Do we have to wait until the loan is reinstated to file Ch. 7?
It is best to wait until the loan is reinstated before you file Chapter 7. When you file, you declare that you're keeping the house and continuing to make payments.
If you file before the loan is reinstated, the bank will likely cancel any loan mod negotiations and play hard ball with you.
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Chapter 7 Bankruptcy Attorney
I agree with Mr. Faruqui as far as he goes. But will you be able to get your mortgage re-instated? You know, it may be best for you to file a Chapter 13 bankruptcy. A Chapter 13 will require the lender to reinstate the mortgage while setting up a payment plan over the next 3 to 5 years to make up your arrearages. So you will start making your monthly mortgage payment again plus you will add about 1/60th of the arrearage amount to the payment every month. This is all done through the bankruptcy court and the bank has little to say in the matter. Now, a chapter 13 won't necessarily discharge all your unsecured debts but it can reduce them down to as low as 10 cent on the dollar depending on how much disposable income you have after you pay your living expenses and your mortgage. The one catch is that you have to have a job to file for Chapter 13 and the job has to pay enough for you to at least pay your living expenses and catch up on your mortgage. I'm in Fort Lauderdale. Give me a call and I'll give you a free telephone consult.