Wanting to let the house go away after all

[iha]

So, we've talked it to death this weekend and have decided to stick it out with the mortgage since we actually can afford it. The only problem is going to be getting the over $7400 in state and federal taxes paid for 2009. I guess the trustee will either be accommodating and let us add them to the already confirmed plan or they will dismiss our case because we cannot pay them outright. And to pay them outside the plan isn't that feasible. It's too much. We've decided that if they dismiss our case, we will refile soon thereafter and still keep the house but that way we'd get to include 2009 taxes and probably another 2 months of arrears on the mortgage that we would not be able to pay in trying to save $ for attorney fees, emergencies etc... might not be terrible after all. We came to this decision after looking at the cost of renting and just not being a homeowner I guess. The rents for homes right now might be low but when the economy levels out, the cost of renting a house will go back up to where it was. That will be about $300- $500 more per month and with the future due taxes we would have to put away, we're not really saving that much in renting vs paying our existing mortgage!
At this point we're just sick of worrying about it!

[chzhd]

We're on a 100% payback Ch. 13 and want to give up our house, too. Our attorney told us that as long as we're making our Ch. 13 payments (which we are), we can stop making our mortgage payments. We've already made almost a years worth of payments to the Trustee.

[espo1357]

We're on a 100% payback Ch. 13 and want to give up our house, too. Our attorney told us that as long as we're making our Ch. 13 payments (which we are), we can stop making our mortgage payments. We've already made almost a years worth of payments to the Trustee.

So, you must not qualify for a 7?
I am in a similiar spot (a 13), but I want to keep the home. however, if they don't offer a perm mod (I am going to adjust soon), then I am going to walk and do the 7 (I do qualify for the 7).

Just sick and tired of the lies from these servicers and banks.

[krielly]

Ok, maybe I am missing something here, but the reason you state you want to give up the house was this:

"We were going to let the house go because we have a mortgage of 309k and the house is probably worth around 225-250k"

Then you state by giving it up, your payments will probably go up around $1000 per month.......

Now, if I do the quick math, you have 54 mos left to pay. If your payment is going to go up that much each month by giving up the house, by the time you have finished your plan, you will have made up that equity, will you not???? 54 mos X 1000 extra/mo = $54,000........

You will have paid out an extra 54K and have nothing to show for it........

I must be missing something here........

[espo1357]

Ok, maybe I am missing something here, but the reason you state you want to give up the house was this:

"We were going to let the house go because we have a mortgage of 309k and the house is probably worth around 225-250k"

Then you state by giving it up, your payments will probably go up around $1000 per month.......

Now, if I do the quick math, you have 54 mos left to pay. If your payment is going to go up that much each month by giving up the house, by the time you have finished your plan, you will have made up that equity, will you not???? 54 mos X 1000 extra/mo = $54,000........

You will have paid out an extra 54K and have nothing to show for it........

I must be missing something here........

Tax shelters?

You like the home?
(there is more to it than just numbers)

Personally, I am upside down about 50k, but for me to start over, and put 20percent down stinks, and I like my property. the neighborhood is great and that is worth something, isn't it? Also, I have a good job in this city, so that is worth something too.

Also, if the mortgage is comparable to rent, then of course, you are better off staying in the home.

Also, it doesn't matter if you intend to stay in the home, and not sell it for many years down the road or live there forever. Equity is overrated if that is your situation.

Rambling here, but what else am I missing here besides the underwater?

[iha]

espo-
I guess you aren't really missing anything. We were just thinking that we would never be able to sell it if the need/want came up.
The house is great. It just sits on a fairly busy street but even that isn't a huge deal breaker. We've decided to hang in there. The deficit of equity was not our only reason for thinking we should let the house go. It had to do with absolutely no wiggle room in case anything came up in our repayment plan and we have about $7400 we need to pay for 2009 taxes owed. If we let the house go we'd be paying almost 100% unsecured debts back but would have some leeway in the plan vs keeping the house and mostly paying back only the secured/priority debt we owe. It's kind of 6 of one, half dozen of the other situation.

[espo1357]

espo-
I guess you aren't really missing anything. We were just thinking that we would never be able to sell it if the need/want came up.
The house is great. It just sits on a fairly busy street but even that isn't a huge deal breaker. We've decided to hang in there. The deficit of equity was not our only reason for thinking we should let the house go. It had to do with absolutely no wiggle room in case anything came up in our repayment plan and we have about $7400 we need to pay for 2009 taxes owed. If we let the house go we'd be paying almost 100% unsecured debts back but would have some leeway in the plan vs keeping the house and mostly paying back only the secured/priority debt we owe. It's kind of 6 of one, half dozen of the other situation.

[iha]

Ya, we're worried if we didn't pay the mortgage, they would foreclose immediately because we told them we wanted to keep the house. We thought about doing that so we can pay the taxes we owe for last year. It's all scary and confusing!
I guess we will see how to handle the additional tax bill after talking to our lawyer. Maybe we won't have a choice but to give up the house...

[woeisme]

I've heard of lots of people giving up their homes post-CH 13 filing. What I've never heard of anyone doing successfully was adding post-petition debt (the taxes) after filing. I think that is the much bigger issue than the mortgage one, at least from all I've read on CH 13s. See your lawyer, post-haste.

[sofarsogood2]

I've heard of lots of people giving up their homes post-CH 13 filing. What I've never heard of anyone doing successfully was adding post-petition debt (the taxes) after filing. I think that is the much bigger issue than the mortgage one, at least from all I've read on CH 13s. See your lawyer, post-haste.

Our attorney included notices to the taxing authorities in our petition. They never filed a claim as taxes were not yet past due. They will be soon, but we are discharged.

Not sure how this would have worked if we weren't discharged. They missed the filing deadline for gov't entities, but the bill wasn't due yet.

Sounds like a question for their attorney.

[iha]

Well, I would imagine that the trustee will either have to allow the new taxes due to be added since we are only 6 months into our plan and it was just confirmed last month. Or, they will have to allow us some extra money every month to make payment arrangements with the IRS and state...
We will see what the lawyer says in a couple of days. Past experience with him means, we will tell him what to do and he will say he'll call us and then 3 weeks later he will call us back.. LOL
I guess the trustee can dismiss our ch 13 and then we can refile with the new and improved tax bill!! I heard they can dismiss your case if you can't pay your taxes due after filing. The only thing that has been paid for the last 6 months are lawyer fees, trustee fees and secured debts so nothing lost but filing fee, lawyer fees and trustee fees. Right? Maybe we can get a new lawyer to file the new case!! We're getting GOOD at this now!

[espo1357]

Well, I would imagine that the trustee will either have to allow the new taxes due to be added since we are only 6 months into our plan and it was just confirmed last month. Or, they will have to allow us some extra money every month to make payment arrangements with the IRS and state...
We will see what the lawyer says in a couple of days. Past experience with him means, we will tell him what to do and he will say he'll call us and then 3 weeks later he will call us back.. LOL
I guess the trustee can dismiss our ch 13 and then we can refile with the new and improved tax bill!! I heard they can dismiss your case if you can't pay your taxes due after filing. The only thing that has been paid for the last 6 months are lawyer fees, trustee fees and secured debts so nothing lost but filing fee, lawyer fees and trustee fees. Right? Maybe we can get a new lawyer to file the new case!! We're getting GOOD at this now!

Just re-read this.

How did you make out?

My IRS bill, about 4k, got added to the Chapter 13. More protection.

[slclove123]

My situation is very similar to yours except we never got to the final confirmation but had already made two payments to the trustee. We also had initially decided to keep the house and unlike you we where actually close to 150K+ in the hole with the house. We where advised not to make a payment to our trustee before our final confirmation meeting and the case was dimissed by the trustee as the attny did not contest it. He had told us to basically re-file and start over again and like you...he has not been much help since that meeting in March or much communication from their part. We wanted to try to do a short sale but since we where not behind we also had to not make that payment as well. So here we are june 1st no word or further advice from my attny, decided to just make payments to the IRS as we also owe them like you, also made too much to qualify for a chp 7, and now have 4 payments in arrears of mortgage they are foreclosing next month. Ohh and the creditors are once again banging on my door as we also had 50+ in unsecured debt with the initial BK filing in Dec 2009. So now we have 50K+ unsecured debt, 23K in back taxes, 414,000 mortage loan, two car loans and one income and feel as if attny is jerking us around. We used our March mortgage payment to find new rental deposit, 1st months, last month as credit was bad. We used April's payment for death of family, We used May's payment to pay for unexpected car repairs and health bills and now June we started paying the iRS some money and holding on to some $$ for attny re-filing fees. Except now not sure if we even have an attny... We did manage to find a less expensive rental, I am sitll unemployed, had a death in the family and feeling overwhelmed once more. Not sure where to go or turn too .....

[espo1357]

My situation is very similar to yours except we never got to the final confirmation but had already made two payments to the trustee. We also had initially decided to keep the house and unlike you we where actually close to 150K+ in the hole with the house. We where advised not to make a payment to our trustee before our final confirmation meeting and the case was dimissed by the trustee as the attny did not contest it. He had told us to basically re-file and start over again and like you...he has not been much help since that meeting in March or much communication from their part. We wanted to try to do a short sale but since we where not behind we also had to not make that payment as well. So here we are june 1st no word or further advice from my attny, decided to just make payments to the IRS as we also owe them like you, also made too much to qualify for a chp 7, and now have 4 payments in arrears of mortgage they are foreclosing next month. Ohh and the creditors are once again banging on my door as we also had 50+ in unsecured debt with the initial BK filing in Dec 2009. So now we have 50K+ unsecured debt, 23K in back taxes, 414,000 mortage loan, two car loans and one income and feel as if attny is jerking us around. We used our March mortgage payment to find new rental deposit, 1st months, last month as credit was bad. We used April's payment for death of family, We used May's payment to pay for unexpected car repairs and health bills and now June we started paying the iRS some money and holding on to some $$ for attny re-filing fees. Except now not sure if we even have an attny... We did manage to find a less expensive rental, I am sitll unemployed, had a death in the family and feeling overwhelmed once more. Not sure where to go or turn too .....

Sorry to hear this.
What about a 7?

What can you do? Just lower your expenses the best you can. There is hope. Times are tough now because the economy is just so bad, but it will turn around. Life works that way. One moment, you have life by the balls. And after, it sucks.

Nobody has all the answers but the Man upstairs.

[ColoradoBell]

I thought I might add here:
The economy and your house equity will come back eventually.
And while you continue to make your mortgage payments, you are actually
building equity. Someone else mentioned that the extra money you'd be forced to pay unsecured creditors would actually equal the amount you say the house is underwater. And if the market climbs 3% a year...at the end of your payment plan, you should be right about at your mortgage. Plus you could do things to your house to make it a higher value...like put in a MIL apt if you have extra room, rent it out, and when you sell, this makes it more valuable. Or landscaping...whatever...things you can do yourself.

If you can afford the payment, then I think you are smart to keep the house.
The money you pay for rent is just thrown away...can't even take get a tax break for property taxes and interst.