Could use some input... Thanks !

[rbaronex]

Hello All,

Here’s my scenario. I will be filing a CH-13 soon, but have a few stipulations and need some input prior to seeing my attorney next week. I am a family of five living in Arizona.


My Debt:

Credit Card Debt: Approx $90k (After steep interest rates and late fees).
Heloc Strip: $49k
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Take home Income $3700.00 monthly. (Spouse currently unemployed).

1st Mtg Payment: $ 1640 (primary residence, underwater by $80k)
2nd Mtg (Heloc) $ 50 (Will do a Lien strip on $49k 2nd Mtg)
Car Payment $ 350.00 (Would be included in the B-13 payment)
Food: $ 600.00
Utilities: $525.00
Cell Phones: $140.00
Assoc Fee $ 23.00
Other Misc exp: $100.00
Auto Gas: $150.00

Total: $3578.00 ($3178 if you deduct the car payment and 2nd heloc)
So, disposable income = $3700 - $3188 = $522.00 I can go to $600.00 if needed.

Here’s sticky situation #1: We have a 2nd property ( no equity, underwater by $20k)that has an elderly lady (mom in-law) living there. The monthly payment is $1120.00. That payment is made by the mom in-law and Brother in-law. Split 50/50. My spouse is not working, but once she goes back to work, that $1150.00 will be ours to bear. No problem, since she has the potential of earning $ 35k - $45k per year. Hopefully back to work in the next 3 to 4 months.

Sticky situation#2: We have an asset (Mobile Home) which my dad paid for, but is titled under my name. We sold a 30% share to another family 2 years ago. We have a written contract, but titled under my name only. The asset is worth $24k, they gave me $10k for their share. So, I really own $14k of an asset. In reality, I own nothing, because my dad wants most of his money back if this gets sold. He does have the transaction or withdrawal evidence that he paid for it, but it is registered under my name only.

Sticky Situation #3: If I accept a job out of state, both homes would have to be sold or at least short sale. How would I do this if I am currently in a BK-13 plan? We would utlimately rent for 2 years or so at the next place of residence (which would be out of state). Mom in-law would go into a rental apt as well.

How will all this pan out? Second property, where mortgage is paid by relatives until wife goes back to work, an asset with an $14k stake, but my dad wants most of his many back if sold since he initially paid for it, relocating out of state? Interesting scenarios. Would appreciate any input..

Thanks, and hope everyone is having a great New year, I hope my will be as well.

RB

[RunningMan]

You left a lot of expenses off. Auto insurance, home insurance, home and car maintenance, etc.

I am not an expert, but I think you may be okay on sticky sitiuation number 1 until your wife goes back to work. My understanding is that if you are not losing money on the rental property (rental income exceeds mortgage, taxes, insurance, maintenance), you can keep it. I don't think you will be allowed to keep it and pay the mortgage yourself though.

I don't know the allowed exemptions in Arizona, but if your name is the only one on the title of the mobile home I think you will have to pay into to the chapter 13 plan a minimum of what it is worth above the exemptions.

On situation number three, I think you can have your attorney modify your plan and just surrender the properties as part of the bankruptcy (or do a short sale).

[rbaronex]

You left a lot of expenses off. Auto insurance, home insurance, home and car maintenance, etc.

I am not an expert, but I think you may be okay on sticky sitiuation number 1 until your wife goes back to work. My understanding is that if you are not losing money on the rental property (rental income exceeds mortgage, taxes, insurance, maintenance), you can keep it. I don't think you will be allowed to keep it and pay the mortgage yourself though.

I don't know the allowed exemptions in Arizona, but if your name is the only one on the title of the mobile home I think you will have to pay into to the chapter 13 plan a minimum of what it is worth above the exemptions.

On situation number three, I think you can have your attorney modify your plan and just surrender the properties as part of the bankruptcy (or do a short sale).

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Thanks RunningMan, appreciate your input. The reason I didn't list Home Insurance on both properties, is becuse it's included in the monthly payment. My Auto insurance on my two cars are payroll deducted, so my net pay includes the payments of my auto insurance. My Mom in-law lives on a small pension, and her partial payment towards that mortgage payment is hard on her. She is a 78YO lady, that we care for and cannot surrender the home since she lives in it. Is there any rule if we are taking care of an elderly family member? That may help our cause in keeping the property, it is not used for rental or income purposes. In regards to scenario #2 with the mobile home, If my dad furnishes proof that he paid for it, would that help the cause? If not, am I going to get hit with the full value ($24k) becuase $10k belongs to another family and was paid directly to my dad. After this CH-13 is discharged, and this gets sold, I would be paying the other family back $10k, plus $14k to my dad. Why am I paying for this in the plan as well? It seems that I will be paying for this asset twice?

Thanks again....

[RunningMan]

rbaronex,

I am not an attorney and I don't know all the fine points of the law. I am sure you can count an adult dependent as part of your allowed expenses, but I don't think they would allow you to maintain a separate household for her. It is not about paying for the asset twice, it is about paying your other creditors what is due them. The bankruptcy court will consider the assets above your exemptions as part of the estate that should go towards paying your creditors. If you choose to keep the mobile home, you will have to compensate the other creditors the amount the asset is worth or you will have to surrender the asset. If you are the only person on the title and there are no liens on the property, I am not sure it will matter if your Dad shows he paid for it. He may have gifted it to you after he paid for it. It is in your name and not his.

[justbroke]

First, this case has trouble written all over it! You really will need expert representation!

situation #1: We have a 2nd property ( no equity, underwater by $20k)that has an elderly lady (mom in-law) living there. The monthly payment is $1120.00. That payment is made by the mom in-law and Brother in-law. Split 50/50. My spouse is not working, but once she goes back to work, that $1150.00 will be ours to bear. No problem, since she has the potential of earning $ 35k - $45k per year. Hopefully back to work in the next 3 to 4 months.

The Bankruptcy Court will not let you confirm a plan where the rental property income is not meeting the expenses to pay the mortgage, insurance, taxes and interest on the debt, plus maintenance costs. If the court did confirm the plan, they will not let you use any money that would be DMI to pay for this. YOu can't have "negative" income from an investment property as the Means Test (Form B22C) doesn't allow you to enter less than $0 for the monthly property expenses.

situation#2: We have an asset (Mobile Home) which my dad paid for, but is titled under my name. We sold a 30% share to another family 2 years ago. We have a written contract, but titled under my name only. The asset is worth $24k, they gave me $10k for their share. So, I really own $14k of an asset. In reality, I own nothing, because my dad wants most of his money back if this gets sold. He does have the transaction or withdrawal evidence that he paid for it, but it is registered under my name only.

Well, you own it 100% and you own $24K worth of it. Worse, is that there is no exemption space to cover it since it's not your homestead and there is no wildcard in Arizona! You would need to pay your creditors, in the plan, at least $24K over the term life. That's $400/month in a 60-month plan... minimum to unsecured creditors.

Situation #3: If I accept a job out of state, both homes would have to be sold or at least short sale. How would I do this if I am currently in a BK-13 plan? We would utlimately rent for 2 years or so at the next place of residence (which would be out of state). Mom in-law would go into a rental apt as well.

You don't have to short sell them in the Chapter 13. You can just surrender them and any deficiency created would be included as a general unsecured claim and dealt with like all other unsecured debt (like credit cards).

How will all this pan out? Second property, where mortgage is paid by relatives until wife goes back to work, an asset with an $14k stake, but my dad wants most of his many back if sold since he initially paid for it, relocating out of state? Interesting scenarios. Would appreciate any input..

I don't know how you made that arrangement with the relatives not having to pay if YOU are working. The asset is $24K and is fully exposed. Your dad is an unsecured creditor.

[rbaronex]

First, this case has trouble written all over it! You really will need expert representation!

The Bankruptcy Court will not let you confirm a plan where the rental property income is not meeting the expenses to pay the mortgage, insurance, taxes and interest on the debt, plus maintenance costs. If the court did confirm the plan, they will not let you use any money that would be DMI to pay for this. YOu can't have "negative" income from an investment property as the Means Test (Form B22C) doesn't allow you to enter less than $0 for the monthly property expenses.

Well, you own it 100% and you own $24K worth of it. Worse, is that there is no exemption space to cover it since it's not your homestead and there is no wildcard in Arizona! You would need to pay your creditors, in the plan, at least $24K over the term life. That's $400/month in a 60-month plan... minimum to unsecured creditors.

You don't have to short sell them in the Chapter 13. You can just surrender them and any deficiency created would be included as a general unsecured claim and dealt with like all other unsecured debt (like credit cards).

I don't know how you made that arrangement with the relatives not having to pay if YOU are working. The asset is $24K and is fully exposed. Your dad is an unsecured creditor.

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Thanks for all your input guys. It did help trastically...
RB