Could my rent possibly be an issue with the trustee?

[Lissy]

I am looking to file my Chapter 13 this week. I am locked into my current apartment lease until next year. The rent is about $400 more per month than the Federal standards allow for my county. However, there is no way I could cut my rent by $400 unless I moved into an unsafe area of town. I am a single woman and not about to do that. Breaking the lease would obviously result in me incurring more debt that I can't pay. So my question is, might the trustee have a problem with this? If so, what would they expect me to do? I am really stressed about filing and just trying to anticipate any potential problems.

[justbroke]

I have found that the Chapter 13 Trustees tend to not care. I saw one Trustee's "cheat sheet" that allowed rent to be up to 35% of gross. Unless it's absurd, you may not run into issues.

My rent was $1,950 and the allowable rent was $1,103 in my County and the Trustee never said anything. Of course, your Trustee may be different and more strict, but, in general, Chapter 13 Trustees are much more lenient than their Chapter 7 counterparts. I found Chapter 13 Trustees to be extremely lenient when you're paying at least 70% back to unsecured creditors with your Plan.

(P.S. you could break the (unexpired) lease as part of your Chapter 13 by formally rejecting the lease.)

[Lissy]

Oh thank you, that's good to know! I am paying back at least 80%, possibly even 100% when all is said and done. I don't want to break the lease and include it in my plan. I'd most likely have a really hard time finding a new place to live with the shambles my credit is in right now.

[justbroke]

If you're in a 100% plan, they really don't care what you do. You have already committed to paying all the creditors back.

[HHM]

Once you are in a 13, so long as the rent is not outrageous, you can usually get a higher rent through a BK 13.

Where you run into problems with rent is on the means test. Unfortunately, you WILL be limited to the housing allowance and not what you actually pay. Whereas, since mortgages are a secured debt, you can take the full amount of the mortgage on the means test even if it is higher than the housing allowance.

[flyinbroke]

Which completely bites. I am in the same boat as Lissy....single female, not willing to move where the rents are IRS mandated...at least not without serious armament and ordnance in my closet. My rent is almost twice what the IRS says it should be and about 400 less than what they say the outlying counties should pay. However since I am stuck in a 13 I have heard it won't be much of an issue...I am not renting a 4000 dollar penthouse in the city.

[Lissy]

That was my concern, that the trustee would object and my disposable income would be higher by $400 and therefore they would expect me to be able to pay $400 more per month. If they did that, my plan would fail without a doubt as I wouldn't be able to make the payments. My atty adjusted my rent on the schedule to reflect what I actually pay and hasn't told me he thinks it will be an issue. He did initially tell me he thought it would be more than the standard allowance, but isn't everything? Geesh! But I also am not living extravagantly. What I pay is pretty average for where I live.

[justbroke]

The Trustee and even creditors can object. Let's put it this way. I originally had absolutely no objections to my original plan with respect to renting at $800 over the allowance for a family of 4. It is obvious that in some places, the IRS standard is not at all accurate. I actually came prepared for a fight with the Trustee with data from HUD and a bunch of comparables to show there was no way I was finding a 5-bedroom place for $1,067/month. No one ever said anything.

In the end, though, I decided to move back into my homestead, so... but no one ever questioned the amount.

What HHM is referring to, is that on the Means Test you need to put the actual allowance on Form B22C line 25B. What I did was filled in the "never touch this line" (line 26) and made a statement that the non-rent/non-mortgage expenses for utilities and rent/mortgage expense for rent, was not only improperly apportioned, that they were entirely wrong for my county based on information from HUD report. I was instructed to never touch line 26 because you will be raked through the coals by asserting that the IRS standards were wrong. Never questioned about it! (My line 26 actually reads (still)... "My rent is $883 more than the STD, and I claim an adjustment of $883".) I think I fell through the cracks.

Your mileage is more than likely to vary. Most Trustee look for that line to have something on it and pounce.

Again, if you're in a 100% plan, I don't think any Trustee will care. If you're in a plan over 70%, you'll get less scrutiny as well.

[Lissy]

That is what my atty did. He put the IRS allowance on line 25B and the $400 adjustment on line 26. Guess I just have to hope it won't be an issue. I think I will end up paying very close to 100%, if not 100%.

[justbroke]

I'm really liking your attorney! One who actually works to get you a fair deal!