Decisions when the Stay on a House Gets Lifted
Once the stay is lifted on a house, the Debtor has a couple of decisions to make. He must decide if he wants to try and keep the house, surrender the house, or sell the house. Another decision the Debtor needs to make is if he wants to continue in the Chapter 13 or convert his case to a Chapter 7. If there is other secured or priority debt being paid in the Chapter 13, he might want to continue in the case.
If the Debtor decides to stay in the Chapter 13, he will need to modify his plan to remove the mortgage arrears and properly list the house as either pay direct or surrender. If the Debtor is able to work something out with the mortgage company or sells the house, it needs to be listed as pay direct. If the Debtor is unable to afford to keep the house it needs to be listed as surrendered. In most cases, a modification removing the arrears will reduce the Chapter 13 Trustee payment, but not always. The Trustee will look at the new income and budget of the Debtor and determine if they can afford to pay back more to the unsecured creditors. A big difference also depends on when the Debtor files (old law or new law) and how long they have been in bankruptcy (more or less than 3 years).
When the stay on a house gets lifted, the Debtor needs to be sure and contact his attorney to get all his options and decide what the best course of action for him to take. Until the attorney talks to the Debtor, nothing can be done to reduce the Trustee payments.
