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Bankruptcy Law/home on wage earner plan

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Expert: - 2/5/2008


Question
Hi, I (individually) have recently filed chap 13 bankruptcy in Massachusetts.  Both my husband and I are on the deed but only he is on the mortgage.  Once my plan was submitted to the court I soon received a letter from the mortgage company stating they wanted to be included in the plan even though I am not listed on the loan.  My lawyer told me I then needed to add it to the plan.  I thought it was the only option and did so.  Now my husband credit is terrible because the mortgage company is listed as in chap 13 wage earner plan even though he is not filing.  My question is did I need to report the mortgage on my plan or could I have gone in front of the judge and explained I am not on the mortgage and excluded it?  My lawyer is no help with this situation.  Thanks

Answer
I will give you some educated guesswork, which is the best I can do without having the benefit of reading your file and having in person consultations with you and your husband.

Because you are on title, your bankruptcy case clearly affects the rights and liabilities of all parties connected with that property, namely the lender, your husband, and you.

The bankruptcy impairs the lender, because the automatic stay prevents them from enforcing their legal rights in the normal way, unless they get relief from the bankruptcy court. For example, if you default on monthly payments they have to get permission from the bankruptcy court before they can initiate a foreclosure, even though you are not on the loan. The fact that you have title to their collateral is enough to thwart them and impair the loan. Hence, the negative consequence on the borrower's credit report.

I think you had no choice but to list the property, show the encumbrance, and have your Plan specify exactly how the mortgage obligation is going to be treated. You can't enjoy the benefits of ownership, (you are on title) without explaining in your Plan how you will deal with the burdens that encumber the title, (the mortgage).  

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Los Angeles Bankruptcy Lawyer Leon D. Bayer

Expertise

Leon Bayer has successfully represented clients in bankruptcy for over 30 years. He is frequently called upon by the media, the California Bar and other associations to provide insight and help educate attorneys on bankruptcy issues. If you or other readers want to keep up with my blog postings about life in and out of bankruptcy, you can follow my blog at http://www.bankruptcyblogger.org/ and my personal web site at http://www.debt-relief-bankruptcy.com and A Human Guide to Bankruptcy at http://www.thebankruptcyguide.net/ Leon also writes about bankruptcy law for Nolo, see http://www.nolo.com/law-authors/leon-bayer.html and his "Ask Leon" bankruptcy law blog column at http://blog.nolo.com/bankruptcy/

Experience

Leon is a Certified Specialist in Bankruptcy Law by the State Bar of California, and has been a practicing bankruptcy lawyer in Los Angeles, California for 33 years.

Organizations
National Association of Consumer Bankruptcy Lawyers, California Bar Association, Los Angeles County Bar Association.

Publications
Author, ?The Essentials Of Chapter 13,? Daily Journal Report, December 18, 1987.
Contributing Editor, Basic Bankruptcy, California Practice Handbook, Matthew Bender 1992, 1993.
CEB Consultant, CEB-Personal and Small Business Bankruptcy Practice in California, 2003.


Education/Credentials
B.A., J.D.

Awards and Honors
President, 1995-1996-Los Angeles Bankruptcy Forum; Member - Los Angeles County Bar Association Committee on Commercial Law & Bankruptcy, 1988. Law Advisory
Commission-Personal & Small Business Bankruptcy Law of the State Bar of California, 1996-2000

MR. BAYER SAYS: The big banks and credit card companys have been working overtime for many years to undermine the Consitutional right of the American people to be able to claim bankruptcy protection. In 2005 the banking lobby successfully convinced Congress and the President to make the laws and proceedures more complicated, hopeing that it will stymie legitimate people from filing bankruptcy. They succeeded in gaining these complex new legal proceedures by greasing the legislative system with hundreds of millions of dollars in "campaign contributions." The good news for the American people is that while the new laws have made the proceedures needlessly complex to the point where inexperienced people can't help but trip over the maze of new rules and regulations, the process is still doable, especially with a lawyer who is well trained and experienced in this specialty.

Past/Present Clients
I have probably handled something on the order of about 15,000 bankruptcy cases thropughout my career.

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