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My bank told me that because I have an active bankruptcy (ch13) that they cannot foreclose even if I stop making mortgage pmts?

Worcester, MA |

Is this true, that as long as I keep making the Chapter 13 payments so as to keep the bankruptcy active that the bank can't foreclose even if I stop making the regular mortgage payments???

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Attorney answers 5

Posted

No, they can foreclose on your loan, but they first have to seek releif from the automatic stay if the property (the house in question) remained property of the bankruptcy estate, which is common in some districts and not common in others. Check with your attorney and the Order confirming your plan. If the property revested in the debtor (you) upon confirmation and you have defaulted on your post petition (after the date you filed your bankruptcy) then the bank/mortgage company can foreclose. It will also depend on whether your mortgage is being paid through your Ch13 plan. If so and you keep making your payments to the Trustee, then you would not be in default on your post petition payments and they cannot foreclose. If you have an attorney you really need to contact your attorney and talk to them about what is going on.

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Posted

I'm just answering the actual question asked, not making any recommendation.

Yes it is true, they cannot foreclose. However, they can seek relief from the stay and then foreclose. There are many pitfalls here and you should be very careful.

The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here. Please visit my web site: www.avanesianlaw.com for more information about my services.

Asker

Posted

Thank you Attorney Avanesian.

Posted

When you stop making the payments, the lender can foreclose. It might need permission of the bankruptcy court to do so, but whoever you talked to about this is wrong.

Posted

TGhey can definitely foreclose. They just need to get permission of the court prior to doing so and if you are not paying, the court is probably granting that permission.

Posted

This information is Dead Wrong. If you stop making your regular mortgage payments the bank can definitely file a Motion for Relief from the Automatic Stay with the Bankruptcy Court. If the mortgage company shows that you have not paid your mortgage, the Court will allow their motion, and they can begin the foreclosure process. Your Chapter 13 Plan payments are curing arrears (previously outstanding mortgage payments). This has nothing to due with the new, ongoing regular mortgage payments. Think of the Chapter 13 Plan as a tool to payback late mortgage payments, but at the same time you must continue to make your mortgage payments.

Now there is one thing to note. If you are in the middle of a loan modification process with the bank, sometimes they tell homeowners to stop paying their mortgage since the loan mod will take care of that. In general this is bad advice, and you should never stop paying your mortgage. However, this may be why the bank told you this.

Asker

Posted

Thank you attorney Hess. I was in the process of a loan modification and was just turned down for the 3rd time because my-ex fiance failed to come through, once more, with the quitclaim deed as promised.

Alex R. Hess

Alex R. Hess

Posted

A loan Mod only works, and will only be approved by the Bank, if all of the documents are provided to them as it states in the Loan Mod application. With Loan Mods, the banks are picky and pretty strict. Also, in many states you can actually look at the Deeds online, most Registry of Deeds have an online website where you can look up the property and print out your own copy of the deeds

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