Move now or later??

[azviolet]

HI all,

Glad to have found this site.
I am going to file a chapter 13 by year end.
One thing I am struggling with is the decision whether to keep my house or leave it.
I am not late on my mortgage or car. I am filing chapter 13 because I owe $35,000 in unsecured credit card debt.
So-
If I give the house back to the bank as part of the 13, will the court then calculate my "disposable income" to be higher because I would then be moving to a cheaper place to live (renting a townhome lets say-it would be perhaps $500 less than my mortgage is now).

If I keep the house now and decide to give it back to the bank AFTER filing the chapter 13 (PS I am upside down in this house thanks to the economy and Arizona does not allow the lender to pursue me for the difference), will the trustee then change my amount that is due each month once they see that my living expenses have reduced?

I am also planning on having a child next year and I live alone. If I am still above the state median with 2 household members, would the trustee at least reduce my payment so that I could take care of my child??

Thanks for the tips..

[usmccop]

HI all,

Glad to have found this site.
I am going to file a chapter 13 by year end.
One thing I am struggling with is the decision whether to keep my house or leave it.
I am not late on my mortgage or car. I am filing chapter 13 because I owe $35,000 in unsecured credit card debt.
So-
If I give the house back to the bank as part of the 13, will the court then calculate my "disposable income" to be higher because I would then be moving to a cheaper place to live (renting a townhome lets say-it would be perhaps $500 less than my mortgage is now).

If I keep the house now and decide to give it back to the bank AFTER filing the chapter 13 (PS I am upside down in this house thanks to the economy and Arizona does not allow the lender to pursue me for the difference), will the trustee then change my amount that is due each month once they see that my living expenses have reduced?

I am also planning on having a child next year and I live alone. If I am still above the state median with 2 household members, would the trustee at least reduce my payment so that I could take care of my child??

Thanks for the tips..

You will get hit (higher payment) if you move and have a lower rent...

One thing I did, I know it sounds stupid, but I purposely went behind on my mortgage and I filed right before the foreclosure hearing (I am keeping my home). I did this as I knew I'd have to make trustee pymts (mine is a 5 year plan). Almost all of my Chapter 13 payment each month goes to my mortgage company verse unsecured credit card debt. My unsecured creditors are getting like 5 bucks each month.

Once you have a child, your plan can be changed. You may even qualify to convert it to a 7.

[azviolet]

Thanks for the reply.
I know what you're saying about going behind on mortgage on purpose! My friend who does real estate/loan mods, etc told me the same thing. She has seen how twisted these banks are, so she told me if I'm going to file a Ch 13, GO LATE ON THE HOUSE!
BUT..
I am assuming it will look bad to have the money sitting in my checking account! Guess u have to make it go away???

[usmccop]

Thanks for the reply.
I know what you're saying about going behind on mortgage on purpose! My friend who does real estate/loan mods, etc told me the same thing. She has seen how twisted these banks are, so she told me if I'm going to file a Ch 13, GO LATE ON THE HOUSE!
BUT..
I am assuming it will look bad to have the money sitting in my checking account! Guess u have to make it go away???

Yep. You'll need to spend it. You can do home improvement with the extra cash or something before you file.

[Billssuck]

If you surrender your house as part of the 13, you stand to have a higher DMI which could mean a higher monthly plan payment. However, if your expenses can "eat up" a bunch of that higher DMI, it may not affect you much when looking at renting vs mortgage. Also, having a child can definitely change your expenses monthly and lower your monthly plan payment---you would just need to modify your chapter 13 to reflect the new expenses. We just modified our ch13 to surrender our house, and our plan payment didn't change after the modification because our new expenses renting vs mortgage and a lower income balanced each other out. So you will just have to weigh all the scenarios and see what works best for you.