Should I streamline my FHA before 13

[minan]

Should I streamline my FHA loan prior to filing chapter 13? This will lower my payment by 160/mo.

[zeezee]

It will lower your mtg payment but it will also leave you with more DMI...

[wanuvas]

You'd have to know how long you plan to keep the home but even if it increases your DMI in th elong run you'd benefit... especially if you plan to stay in the home past your plan assuming that absent the bankruptcy you would have done it anyway.

[minan]

I plan on staying here for a while especially if I file chapter 13. this is the only place I have to live. Met with a lawyer who said I should go ahead and do the streamline as well as trade in my lease (which ends in 4 months) and get a lower payment financed. I'm going to try to wait it out for a few months to save up money for the atty fees.

[wanuvas]

You have to be careful about taking on new credit after you have made the decision to file bankruptcy and I would definately ask your attorney on what is legal vs considered an abuse of process but what you can aim for is keeping all your debts current to get all your financing in place BEFORE you file to get the best financing possible.

The attorney we used provided some very helpful guidance on our pre-bankruptcy planning on what we could easily and legally do, what was pushing the envelope and what would be considered abuse by the trustee or draw objections from creditors.

[minan]

Logically the lease ends in 4 months. I would have been getting a new car regardless of whether or not I file bk. So how is that abuse? I still plan on paying on the car because I need transportation during the 5 years. In fact, I'm even considering including this in my plan so I can get it paid off in 5 years. One of the attorneys I met with included this in the payment number she came up with for me.

This is so confusing.

[NoTomatoCan]

So long as you are purchasing a vehicle that has a payment under the IRS guidelines, and you can afford the payment and your eventual plan payment, there should be no issue.

Getting good, reliable transportation prior to filing BK is a must, especially if you have a lease ending in 4 months.

Many on this forum have done this exact thing.

Might help to make a few "good faith" payments before filing, but since the vehicle is a secured loan, the lender will be paid back in full - so no real argument for abuse.

[wanuvas]

Sorry... I wasn't trying to imply what you are doing is abusive. NoTomato gave excellent advice... Here's an example from our lawyer... Replacing our 10 year old car with a CNG vehicle with a payment for 60 months not abusive... using our line of credit on our CC to buy a home filling station for said car... problamatic but possible unless done right before you file... taking a cash advance from said loc... don't do it. Basically my best advice is once you find the lawyer you feel comfortable with & you are a retained client of theirs describe your needs to accomplish before you file and if you get them to say you did it as pre-bankrupcy planning on the advice of your lawyer there is a much higher burden for the creditor to sustain an objection.

[minan]

wanuvas: no offense taken. I just can't see how logically a trustee could think it was abusive of me to buy a car a few months before my lease is up. I understand that trustees are supposed to be objective, however reading some people's experiences on this forum makes me wonder.

I bought the car yesterday and am not going to worry about what the trustee thinks at this point. I haven't filed yet nor retained an attorney.

When I file and I do get asked by the trustee, I will just explain that the lease was coming to an end and I needed transportation.