Does a chapter 13 payment go up if you walk away from your home, and rent for less?

[espo1357]

Current mortgage is about 1300, and I am considering walking because it is going to go to about 1700 in six years, set at 5% interest, and the home is under 100k.

I don't think I will even break even at year 6, and with the payment going up, its not going to work for me.

Currently, I am in a 13, and all is good.

Now, if I walk from the home, and my rent is less than 1300, say its 800, does that change my chapter 13 plan? Would I have to pay more in the plan?

Thanks!

[papie]

Possibly.

If you are paying less than 100% to your creditors, it's my understanding that a decrease in housing costs would give you more disposable income, which in turn would mean you would be paying more to your creditors. I would certainly discuss that with an attorney before you jump on the foreclosure bandwagon though.

[espo1357]

Possibly.

If you are paying less than 100% to your creditors, it's my understanding that a decrease in housing costs would give you more disposable income, which in turn would mean you would be paying more to your creditors. I would certainly discuss that with an attorney before you jump on the foreclosure bandwagon though.

Thanks for your feedback.

Ya, of course I am going to talk to the attorney on this.

Regardless, it may go up a few bucks, but I can get 6 months to a year living rent free and I don't think it would go up that much.

If it did, I would consider a dismiss (I filed to get rid of some cc debt, but mostly to keep the home, stupid move, especially since I could have filed a 7 because pre modification, my mortgage payment was too high...bad lawyer advice) of the chapter 13and then refile or just wait until I qualify for a 7 down the road.

There are always options to explore to make the future better.

[Billssuck]

We surrendered our house (well...still waiting on foreclosure...whenever that will be) while in ch13. We redid our expense sheet and if some other expenses went up or your income went down (like ours did), you may not have to make up much of the difference from mortgage vs rent. Plus look at your tax withholding amount for the expenses if you file not claiming mortgage interest as an itemized deduction in the future...we had to claim about $250 more a month in taxes to make up for the mortgage interest deduction. What I'm saying, really scrub your expenses and it may not turn out too significant of a difference. But a good attorney should be able to help you out with all of the that. Best of luck!

[Flamingo]

Current mortgage is about 1300, and I am considering walking because it is going to go to about 1700 in six years, set at 5% interest, and the home is under 100k.

I don't think I will even break even at year 6, and with the payment going up, its not going to work for me.

Currently, I am in a 13, and all is good.

Now, if I walk from the home, and my rent is less than 1300, say its 800, does that change my chapter 13 plan? Would I have to pay more in the plan?

Thanks!

You can't base a Chapter 13 payment on a mortgage that will rise in payment in six years. Your Chapter 13 was based on your financial status as of the date you filed. If you modify your Plan yourself without speaking with your attorney by choosing not to make your mortgage payments, your Plan will be dismissed. Your mortgage is part of your Chapter 13 whether or not you make your payments in or out of your Plan. By not making the payments that are part of your Plan, you risk dismissal and are back to square one before you filed. You need to discuss this situation thoroughly with your attorney - best of luck to you!