Mortgage allowance...

[sh9730]

Hi, trying to decide between CH7 and CH13....want to keep the house if possible....but am currently behind 3 payments....had a repayment plan approved, but I wont be able to keep to that plan (they wanted good size lump sum up front) prior to needing to file BK.

My question for the CH13 experts is...how strict are the trustees on allowable Mortgage payments....

In my county (Pinal County, AZ) the allowable mortgage expense for a single person is 664.00 or something...my payment is currently 1200.00 plus per month...now that does include a bunch of escrows (mortgage ins, homeowners ins, and prop taxes - bring the actual "loan" payment to more like 860.00).

My understanding that going over the alloted amount is sort of common, as long as you can justify payment (i.e. rent just as expensive as keeping this payment - special reason you need the house etc..)

I can make some of those arguments....I run a business out of the house so I need more room than an average single....rents are high here right now due to all the foreclosees needing to rent now etc....

Just not sure I can go from 664 to 1200......

Thoughts or experiences?

Thanks so much in advance.

[dlinid]

Is your house upside down on value? What do you owe compared to what it is worth? That is am important consideration. Also, if you itemized and decide to give up the house, dont forget to calculate how much tax savings you are getting from that home that you will not if you have to rent. Sometimes attorneys forget the tax implications of that good old mortgage deduction. Also, maybe you can argue that you would have to rent office space if you had to leave your home office and that payment would have to be part of your plan as well, thus offsetting any good that getting you out of the home might achieve? We have a mortgage twice what our allowance is, but we were neutral as far as worth of the house at the time we filed. Many others here are much more learned than I and will have other suggestions, so keep looking in on your thread. Best of luck!

[momofthree]

A mortgage is not subject to the housing allowance. Your payment will be allowed. This rule is the same whether you file ch.7 or ch.13.

[sh9730]

Thanks to both of you for the quick responses....yes..I understand all the arguments on making the decision whether to keep the house or rent. My house is upside down, but not by so much that the benefits of staying here to not have to deal with moving the biz are worth it etc.. I am heavilly leaning for trying to keep the house, but other than the house, all the other aspects point to the better choice being a CH7.

Momofthree...thank you! Is this from your personal experience? Or just knowledge....I seem to be getting such conflicting information? I mean why even have the housing allowance if it isnt applicable?

Also, is it the same for a car lease? I am behind a couple payments on that also - actually it may get repossessed before I get a chance to file....we ll see..

Thanks again...

[LadyInTheRed]

Momofthree is correct. On the means test, you are allowed to deduct payments on secured debt, which is what your mortgage is. If your mortgage payment is less than the housing allowance, you deduct the mortgage payment from the housing allowance and claim the balance of the standard housing allowance. If your mortgage payment is more than the housing allowance, your housing allowance is zero.

I know this from personal experience, but you can see for yourself how it works on line 20B of the Chapter 7 means test and line 25B of the Chapter 13 means test (which isn't actually called a means test, but it's mostly the same form).

[xxbrowns]

I don't mean to hijack this thread, but I was looking through that chapter 13 form (linked above) with the expenses, etc., I want to know how you would calculate your medical expenses if there has been a diagnosis of cancer in the family. Does anyone know what is the procedure is to figure that out?

Thanks.

[xxbrowns]

duplicate..sorry.