Things Can Come Up Towards The End Of Your Bankruptcy.

Video Transcribed:  Oklahoma City Bankruptcy Attorney Edward Kelley with 888-DEBTLINE, Getting close to the end of our series on saving my house and/or car in bankruptcy. Honestly, I’ve talked a lot more about a house, so maybe I’ll go back and do a series on the car. As I stated today, I’m going to talk about when you’re deep into it, things that can crop up, later stages of saving your house from chapter 13 bankruptcy.

For purposes of this, we’re going to assume that you have come up with a plan that pays your regular mortgage payment through the trustee. The amount of your arrearage, at least the minimum, that will have you paid off at the end of the plan which is a maximum of 60 months or five years. I think our last example, we said if you had a $500 mortgage payment and a $500 arrearage payment, so you’re paying $1,000 a month.

Let’s say you’re 40 months into it, over halfway through the plan. Just bear in mind, chapter 13 always gives you the right, if you would be eligible to do a 7, meaning it’s been eight years since you filed your last chapter 7, don’t even think about the 13, to convert.

Let’s say the bottom drops out, you lost all your income, so you can’t make that planned payment anymore. If you stop making the payment, they’re going to dismiss your case. It’s always smarter to go ahead and just convert it to a 7 which is not a difficult process. Charge much less myself to convert, than I do for a 7 from scratch. Bear in mind though, that creditor has a right to that arrearage. If you go into a 7, then you’re going to have to abandon that house.

Or somebody’s going to have to bail you out, not with a loan, but with a gift to pay off the entire arrearage. Or unless you can talk the lender outside of the bankruptcy, once the stay is lifted, into working with you which is probably not likely.

You always have that out, but you’re going to have to plan on surrendering that property. If it’s dismissed, then everything just comes back. They get to go to where they were just before you filed, which maybe is almost the sheriff sale, maybe almost the confirmation of that sale.

Bear that in mind, some people will file a 13 to give them some breathing room. That can be effective if there is some reason to think you’re going to have a windfall down the road. Of course, all of your debt’s going to come back, but that automatic stay can get you some breathing room.

Although bear in mind, if you do that, you file a 13, and then it gets dismissed. If you file another 13 within a year, you don’t get that automatic stay for more than 30 days, unless you can convince the court to give it to you. That rule is specifically to prevent using it as a stop gap. I believe after two, I haven’t had this personally happen, you don’t get a stay at all, unless you can successfully motion why you’re a special case.

Okay, now here’s the big one that comes up, mainly the purpose of this video. Notice of mortgage payment change. This is a filing that happens, almost every case I have, where the house is an issue. I get this.

What this is, and this happens outside of bankruptcy to you all the time. A major part of your mortgage payment is the escrow, nothing to do with the principal, taxes and insurance. It’s generally the insurance portion that changes.

Insurance seems to go up, and up, and up, and up. If that’s a rolled into your mortgage payment, and if it’s handled by your mortgage company or through the escrow, meaning you don’t pick the insurance. You don’t handle it. That’s up to them to do. If the rates go up, boom, your payment goes up. It can go up substantially. When you get a notice of that, you’re going to have to address that.

If you were at the bare minimum, as in our example, you’re making $1,000 payment a month, $500 and $500. Now your mortgage payment escrow portion has increased your mortgage payment to $1,000. You’re going to have to put another $500 into that plan.

In the western district of Oklahoma, you’re not allowed to pay your mortgage outside the plan, or you’re going to have to take apart your mortgage payment. If you can do this, find another insurance company and keep it down. This is the big thing to watch for.

Hopefully, your attorney will warn you that this may well happen. Over five years, almost anything can happen. The point of this whole video is you’ve got to keep it up for five years. It ain’t over till it’s over. If you have any questions, as always, you can reach me on Facebook at our group called Oklahomans for Debt Relief.