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The day B4 my TTEE sale... the trustor filed for Chap 13...

Posted by Alfred, Trainee on February 06, 2002 at 5:38 PM

Hey Ward. I've talked to a couple BK attorneys who have a lot of experience dealing with these situations for banks, investors and note holders such as myself. My understanding was not correct about this.

What I've learned thus far is that you can only get a "relief from stay" if it's a Chap 7 BK. If it's a Chap 13, you can 1) hope the trustor doesn't file all the docs within the 15 day period so that it gets dismissed; 2) file an opposition and hope to get a dismissal of the BK; 3) if that doesn't work you have to wait until the "341 meeting" and object to the debtor's plan, in hope of dismissal.

But... if the plan is accepted by the judge, then the trustor (as long as he makes his payments from this point on) will be able to stretch out paying me the arrearages over a 3 year period. This is not good!

Also I learned that trustors can file for Chap 13 for 2 or 3 times (continuing to stop your foreclosure) before the court won't allow it any longer; then they also can go to Chap 7. Sometimes they do what the attorneys call a "Chap 20" in that they file a 13 and a 7 at the same time.

I need more understanding on this of course, but right now, if the data I'm getting is correct, it appears that I'm not going to be able to cash out on this because I could be stuck for 3 years getting the arrearages from a payment plan.

The plan and strategy from the very beginning has been to cash out on these notes and not have them as fixed income vehicles. What is your take on this? Will I still be able to sell the note if the BK isn't dismissed. I probably should call you so that we can talk in detail. Thanks in advance.


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