Buying a House In chapter 13

[eringal27]

Ok, we are stuck between a rock an a hard place. My husband qualifes for a VA loan even now 2.5 years into our 13. We are stuck for another 2.5 paying it.

My issue is this, we are not sure what they show as his "income" and he has had a few raises since we started the 13 payments and part of the mortgage process is to "sign off" on the loan we want to incurr more debt.

We have NO idea what they will approve and WONT approve so we have NO clue how much of a house to go for, ESP if they still show his old income. If we tell them his NEW income, they will start taking MORE from us and we are barely surviving as it is! We want to buy a house so we can stop renting for 1500 bucks a month! We have a growing family and the taxes are killing us along with renting this house! Anyone have ANY insight at ALL? Any advice would be MUCH appreciated

[Pandora]

When you say

"If we tell them his NEW income, they will start taking MORE from us and we are barely surviving as it is!"

....does that mean that you havent told your attorney of any pay increases your husband has had during your Ch. 13 thus far??? Thats what it sounds like by your writing, and thats not a good thing

Whenever you get a salary increase, you're supposed to notify your attorney, who will tell you either it must be reported to the Trustee or the trustee isnt requiring reports over XX%; either way however you're supposed to notify him/her. As to purchasing a house, you need your trustee's permission to do so - no new debt can be added w/out consent is the general blanket statement with the exception on some confirmation orders that you dont need permission for less than $5K.

If however, you should receive Trustee's approval to purchase - know that if its less than the $1500 you're currently paying in rent it's possible that your payment in your 13 may increase depending on what amounts you're currently claiming on your schedules.

Call and talk to your attorney, discussing everything with him/her.

[LadyInTheRed]

In response to how much house you should buy, the answer is the same as if you weren't in BK: buy as much house as you need, but no more than you can afford. In fact, decide what you can afford and find a house that costs less.

[Gigi1999]

I have a question on this (not to hijack...but I don't want to start a new thread)...right after we confirmed, my husband got a pay cut. That was 2 years ago and we never reported. We have just been paying the amount as owed. They are about to give him a raise equal to what they took. Should that be reported?

Good luck on the whole house situation. I will be watching this thread! I am curious!

[shark66]

.right after we confirmed, my husband got a pay cut. That was 2 years ago and we never reported. We have just been paying the amount as owed. They are about to give him a raise equal to what they took. Should that be reported?!

If the raise is just getting you where you initially were, I'd keep quiet. And save the money for rainy days...

My $0.02 only...

Good luck.

[andy158]

Our plan says to report any increase over 10% in our base wages per year. My monthly income goes up and down monthly according to any available overtime we are required to work. Only my base wages were calcualted initially in our plan.

Our first tax return sent to our trustee was $15k more than the income we initally filed on. All the additional money was from overtime. After taxes I netted $9k. Nothing was said. Some districts are strict with income variances others are content you are making the required payments on time.

[ABC]

Why buy a declining asset now ? Real Estate will be down another 10% this year. I put the raise into a shoebox, savings, or 401K max until you're done. That way you'll have a DOWN payment instead of doing 100% financing. 13 or not, there should be no urgency to purchase in 2011.

BTW- VA funding fee is reduced even with only 5% down, so 5% or 10% should be a goal for next 2.5 years

[ShooFly]

I agree... it's still not a good time to purchase a home... but it may be a great time to save some money and move to a cheaper apartment or rent a cheaper house.

[papie]

I think trying to get a trustee to approve a home purchase is going to bite you in the bum.

And really, "how much house you should go for" should not depend on the trustee, it should depend on what you can afford and what you can fit into your monthly budget. A lot of people (I'm not saying this is you), but a lot of people tend to think that if they get approved for $X amount of a mortgage, that's what they should spend. In all reality most mortgage companies approve people for much more than they can afford.

I would look into renting a cheaper home. Renting is cheaper than owning and anyone who says otherwise is lying. When you rent you have nothing to pay except rent, utilities, and renter's insurance. When you own a home you have property taxes, mortgage insurance, homeowner's insurance, all on top of the monthly mortgage payment. That may be less or about what you are paying now to rent, but when you own you are also responsible to fix your own broken appliances, plumbing issues, heating issues, etc....maintenance on a home can far exceed whatever you pay in a monthly mortgage payment. If your rent is killing you, wait until you have a mortgage + the unforeseen cost of owning a home.