I’m Currently in a Chapter 7 Bankruptcy and My Attorney Told Me Not to Make My Mortgage Payment. – Ed

“Dear Lewis,

I am currently in chapter 7 Bankruptcy.

My home is worth 315,000 and the court is getting an appraisal as ordered by the trustee. my home is worth about 380.000 dollars and I have had had contractors over giving me estimates on work that is needed. so far the roofer gave me an estimate for 20.000, to tent for bugs, 3,500 new solar system mine is 28 years old new is 8.000 and my asphalt drivway has large cracks with weeds growing in them, note: i have 3 acres and the drive way is large, and i think to remove and apply 4″ of asphalt would probably be around 17,000.

I am currently 3 months behind and my attorney advised me not to make this months mortgage payment. Sould I make it? or not. I want to do a loan mod with someone as soon as this is over? what do you think about this.

My attorney says don’t worry if we don’t get a chapter7 I can get a chapter 13 and i will start fresh on my payments? can you advise My home is in Valley Center Ca.

Thank you for your help. I went through a divorse and i got stuck with every bill she had made and now paying her spousal support and i have had to pay flagstar bank a higher payment to get caught up. went from 1,950.00 to 2868.95 a month to pay back taxes and for them to pay them selves back.

is my attorneys advice to not pay the mortgage this month wize info. not i am already 3 months behind and if i go past the end of the month am i protected by filing chapter 7 bankruptcy?



Dear Ed,

It seems as if you have a few competing issues going on in your current chapter 7 case. First of all, let me stress that you are currently represented by an attorney, so I cannot give you specific advice because of that representation.

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But if someone were to come to me in a similar situation, here is what I would tell them…

First of all, do you really want to keep the home? (I ask this of all clients). It seems that you are close to upside down considering all the repairs that are needed. I am not sure how drastic some of the repairs are, or if some are minor or can wait.

In Florida, we have an unlimited homestead exemption. So a chapter 7 trustee would not be interested in your home. But in California, I am almost certain there is a dollar limit to the amount of equity you can exempt in bankruptcy for your residence. I am assuming this is why the trustee ordered an appraisal – to see if there is unexempt equity to be force you to “turnover” for the benefit of your unsecured creditors.

Second, if one wants to keep their home, I am not sure why someone would advise to not make a monthly payment. If you are already 3 months behind, I am not sure the lender would take the payment anyway – and this might be why the attorney said not to bother sending the payment.

If you were to convert to chapter 13, it would allow you to catch up on the back due payments over a period of 36-60 months.

But to specifically answer your question… Chapter 7 bankruptcy does NOT protect you from losing your home if you are behind on the mortgage, only chapter 13 can. In chapter 7, if you are behind on the mortgage, the lender’s attorney will file a relief from stay, incurring more expenses on your mortgage account, and then proceed with a foreclosure at some point (sometimes quickly, sometimes not at all).

Some clients are able to get caught back up quickly on their own if only a few months behind. Others need the comfort of a 36-60 month chapter 13 plan to be able to get current on the mortgage while protecting themselves from the lender being able to file a foreclosure.

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If you are definitely keeping the home, I would ask your attorney what is the best way to get caught up on the mortgage. That will help determine which bankruptcy chapter is best for you.

My name is Lewis Roberts and I’m an attorney licensed in Florida and Georgia. My practice focus is consumer bankruptcy, real estate issues/closings, and mortgages. I also have Florida real estate broker and mortgage broker licenses. I am a proud member of the National Association of Consumer Bankruptcy Attorneys (NACBA), National Association of Consumer Attorneys (NACA), and a graduate of Max Gardner’s Bankruptcy Boot Camp. I enjoy helping people with decisions that impact their financial well-being.

Legal Disclaimer: This is for educational purposes only. It is not to be relied upon as legal advice. It also does not create an attorney-client relationship. No such relationship is formed with attorney without a written agreement.

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