Home Underwater...not just under but 20,000 leagues under!

[trayc]

First off I should state that I am not the one who has filed for bk, my ex-husband did. He calls me crazy and obsessed, and I am okay with that label

Long story shorter..but not short (sorry in advance).

Ex owes me currently $21k in support arrears, so I have a vested interest in his bk filing.

Ex and current wife filed for chapt 13 bk in eastern missouri.
Ex is not listing everything in his bk (like the fact he is behind in support to 2 ex-wives and behind in alimony to one of them - not me). There are actually quite a few things he either didn't list (assets and debts) or listing incorrectly.

His 341 meeting was 4/19/2010 and I was there representing myself as a creditor. I got my questions answered and I am content. To be quite honest, I hope he is able to have a revised plan confirmed and get on with his life...oh yeah and finally help pay for the rearing of our child.

Ex has a home that is worth $70k for building and land. However, the current amount due between first and second mortgages is $300k. He is currently $16,500 behind in payments between the two as well.

Home has gone into foreclosure twice, that last one was a day before auction that he filed bk. Those two occurances have lead to his mort balance to be increased for fees, attorney bills, etc. However original loan amount was for 240,000. The house in 2006 when purchased was appraised at 90k, I don't know how he got the loan for the amount he did, but doesn't really matter.

At any rate, ex submitted first plan (which is being objected by trustee)
Here is what he originally submitted:

total income: 4075.32 (after taxes and such)
1st mort: 1203.00
2nd: 502.78
1st arrears: 197.92 (per month for 48 months at 0% interest)
2nd arrears: 146.88 (per month for 48 months at 0% interest)
Truck pay: 138.80 (per month for 60 months at 6.34%)
child support:1000.00 (not the correct amount, just what he is stating)
mnthly exps: 1004.00 (as listed in his financials to live)
-----------------------------------------------------------
end of month: -118.06

Ex has support obligations to me at 325 a month, to his other ex at $600 a month and $300 a month for alimony to her as well. That is a total of $1225, which he didn't list any in his schedule E. I don't know if he is current on his support to the other wife, I don't think so but she hasn't filed a claim.

At any rate, if you include the true amount of support and arrears, over a 60 month plan he would be -817.36 in the hole if he still wanted to keep his house and truck.

Alright...now the question!

At the 341 meeting, the trustee was very interested in the difference between the mortgage balance on the home and the value of the home. He is insistant on keeping it, and to be quite honest, it's the home that has gotten him in this mess to start with. he simply can't afford it, but again I am the ex wife, so what do I know.

Can the trustee or the courts make him sell his house?

Or maybe the better question should be, if you can't afford the payment plan you have put in place, what do the courts and trustees expect? Has anyone been down this road and understand how it works?

[SMinGA]

My first question - if his 1st mortgage is more than the value of the home, why is he paying on his 2nd? It should be stripped and converted to unsecured debt in his case. That would clear up roughly $650/mo.

Next, I don't think the trustee can 'make' him sell when he is under water. But the trustee can dismiss his case due to lack of feasibility, if its just not possible on his income & obligations to come up with a livable plan. Like ~$1,000 a month on all other expenses. Transportation, food, utilities, etc. does not sound feasible.

While most would agree its foolish to try and save a house worth $70k when you owe $240k (my best effort to forget the 2nd since he should not be paying it as secured) but I guess the next question becomes are there alternatives? Making someone else give up the emotional attachment is a hurdle - but can he rent a comparable size home in his area for less?

Does he have an attorney, or did he file pro se?

[trayc]

My first question - if his 1st mortgage is more than the value of the home, why is he paying on his 2nd? It should be stripped and converted to unsecured debt in his case.

Does he have an attorney, or did he file pro se?

He does have an attorney, though not a very good one imo. His attorney let him fill out his paperwork on his own and simply submitted it, I can't imagine he actually went over it like a bk attorney should. (had he, he would have seen that he listed some child support as unsecured and requesting to discharge it among other red flags).

Even if the second was stripped (which I agree he should try to do) he would still be -167.71 at the end of each month (which is much better at least!)

[SMinGA]

If he can't come up with a workable plan (and it may not be possible on his income w/ his support obligations) then the ch. 13 will just be a temporary roadblock. It will get dismissed, and he'll eventually go into foreclosure.

Sounds like he really needs to get his income up. Easier said than done of course...

Is your Ex kind of clueless when it comes to finances? As in, he rushed thru the #s and didn't realize he did not include all expenses? Or intentionally put in lower #s to try and get a plan thru? If the latter, then he probably had no intentions of paying on the support orders to the full extend that he is supposed to, and just wanted to make the #s work to keep the house.

[trayc]

Just my opinion but this had nothing to do with being responsible and trying to make good as much as he can on bad choices. He has never been one to embrace responsibility, and believes that he is above the law on many regards.

So, I think this was a stall process for trying to save him home from foreclosure.

My ex is not clueless when it comes to money, he is just not responsible. He allows emotions to dictate what is important, like this house. If you stand back at look at the big picture, it's kind of alarming he can't see it.

Home is just over 1100 sq ft, with substantial foundation issues (that way when he bought it). Lives on 3 arces (not farmable or developable) out in the country.

The ironic thing is, he works for a housing company that rents and sells Villas. These villas are new and really nice! a 3 bedroom villa could be rented for $500 a month, and they are larger than his current house.

Okay, so I truly don't believe he can create a plan that will address his priority claims in addition to his home or vehicle.

Can the courts make he convert to a chapter 7 or is that a choice of the filer? Can they can choose to convert or dimiss?

[SMinGA]

I believe he can choose to convert or dismiss. I don't think the court can make him convert to 7, but the trustee can motion for dismissal.

From what you've said, my guess is he'll build this house of cards as long as he can - until it collapses and the trustee ends it.

I vaguely recall something about creditors forcing a ch. 7 but I think that is for liquidation purposes and it does not sound like he has assets. (And other than knowing its possible for creditors to force a ch. 7, I know nothing on that particular topic.)

[NowImDownInIt]

It looks to me like this is an unfundable plan and there is no way a trustee will approve it.

[trayc]

SMinGA, thank you so much for your insight. After reading for hours and hours about bankruptcy and other stories from individuals, I pretty much came to the same conclusion. But I am also keenly aware of his ability to pull the wool over someone's eyes and get away with something most people would never consider.

However, my experiences have all been in the family courts, and so far what I have seen in the bankruptcy courts and speaking with the trustee, the lattitude just isn't there.

I can't though, understand why in the world he would be willing to pay a bk attorney $1000 to help him just to only stall the foreclosure process. Seems like he is throwing more money away at that point.

[trayc]

It looks to me like this is an unfundable plan and there is no way a trustee will approve it.

If the plan is 'unfundable' how many attempts does the debtor get to try to make it work?

His confirmation hearing is set for 5/13/2010. There are currently 2 objections to the plan, 1 from the trustee and 1 from MO IRS. My understanding is that they will continue the confirmation date 30 days out and THEN listen to the objections. (my understanding came from interviewing 2 bk attorneys to represent me in this process...to which I have chosen to do it myself)