Moving across country while in CH13....

[8forme]

There is a strong possibility we will have to move across country in the spring. We are fine with surrendering the house. I will contact my attorney, but wanted to see if anyone has any experience or general knowledge of a few questions.

1. If company does not offer relocation, can we skip a couple mtg. payments since we will be surrendering the house anyway and bank that money for the move?

2. Will our case remain in our current state?

3. We will be renting a house as we have a large family and won't fit into an apartment. Can we modify our plan if need be to offest the mortgage interest deduction?

4. The area we are looking we can rent something large enough fo us and comparable to our house now for about $500 less than we are paying for mortgage. But, with not getting the tax deduction, it will probably require the extra money for taxes.

5. Taxes, we are considered high earners and get hit with AMT every year and can't take our deductions for our kids and such so our taxes will go way up as the mortgage is about the only thing we can deduct. Will that be taken into consideration?

Has anyone moved across country while in a CH13? We are about 3 months into our 60 month plan. Thanks for any insight or tips!

ETA: How does surrendering a house in a CH13 work? Can we stop payments and wait for forclosure or are we required to make payments until we surrender? Will it still go through forclosure process? Do we have to be present to sign anything, will we have to come back across the country?

[Flamingo]

With something major such as this, you need to consult fully with your attorney as the trustee will need to be supplied with a lot of information. You also cannot arbitrarily stop payments on your Plan without Trustee permission. I suggest you contact your attorney immediately and provide him/her with as much financial information/paperwork as possible as to your move, job change/situation, rental costs, etc. Best of luck to you.

[8forme]

We are not wanting to stop plan payments, the mortgage is paid outside the plan. We want to stop paying it about 2 months before we move and use that money for moving expenses. Our plan payments would not be interrupted, though would probably have to be modified once we move to account for an increase in income taxes from no mortgage interest deduction. Just not sure how the mortgage payment would be handled?

[Flamingo]

I'm sorry - I meant "mortgage" payments not "Plan" payments as I indicated above...your mortgage is still part of your Plan/BK even though you make payments outside of your Plan. If you stop mortgage payments without fully going over your situation with your attorney and trustee and without permission, you risk Plan dismissal. During a Chapter 13, never stop paying anything that is part of the Plan or one's Plan can be dismissed.

[heman]

Flamingo is dead wrong!! Discuss NOTHING with the Trustee!

I just did this very same thing 4 months ago. KEEP UP THE PLAN PAYMENTS NO MATTER WHAT!

1. Stop making mortgage payments, hire a property manager and rent the house out. Make sure to pay the Taxes and Insurance and DO NOT let the HOA payments fall behind (if they exist).
Cash the rent checks and put the cash aside (Do not deposit). No need to discuss ANYTHING with the Trustee, Speak ONLY to your Attorney.
2. The plan remains with the same Trustee. All that is needed is a change of address submitted to your Attorney. They will contact the Trustee.
3. Don't mess with your plan...PERIOD. Notify ONLY your Attorney of your move and go.
4. Don't mess with your plan...PERIOD. Notify ONLY your Attorney of your move and go.
5. Don't mess with your plan...PERIOD. Notify ONLY your Attorney of your move and go.

[Flamingo]

Flamingo is dead wrong!! Discuss NOTHING with the Trustee!

I just did this very same thing 4 months ago. KEEP UP THE PLAN PAYMENTS NO MATTER WHAT!

1. Stop making mortgage payments, hire a property manager and rent the house out. Make sure to pay the Taxes and Insurance and DO NOT let the HOA payments fall behind (if they exist).
Cash the rent checks and put the cash aside (Do not deposit). No need to discuss ANYTHING with the Trustee, Speak ONLY to your Attorney.
2. The plan remains with the same Trustee. All that is needed is a change of address submitted to your Attorney. They will contact the Trustee.
3. Don't mess with your plan...PERIOD. Notify ONLY your Attorney of your move and go.
4. Don't mess with your plan...PERIOD. Notify ONLY your Attorney of your move and go.
5. Don't mess with your plan...PERIOD. Notify ONLY your Attorney of your move and go.

Excuse me - did you actually read my response? If not, please go back and read. I told her not to stop making ANY payments as to her Chapter 13 Plan or her mortgage as stopping mortgage payments will risk her Plan being dismissed as her mortgage payments are part of her Plan even though they are paid outside the Plan. She needs to contact her attorney to go over all this as if she contacts the Trustee they will have nothing to do with her and advise her to contact her attorney as she is represented by counsel. I did not advise her to contact her Trustee.

In fact, you are "dead wrong" because If she does what you state in your post above without first getting permission to do so from the trustee, she risks Plan dismissal which is the worst thing she can allow to occur.When there is any big financial situation during a Chapter 13, everyone needs to remember that you are not in charge of your financial estate - your trustee is. You cannot make major financial moves without permission. Contact one's attorney as to your particular situation and don't make any major financial moves on your own.

[heman]

Oh yes...I read your response - In fact, I have read many, many of your responses. Time and time again, you sound as if you're working for a Trustee! You have a discharge of Chapter 13 for 5 1/2 years now? I question if you were ever involved in one? I read SCARE TACTICS in your posts.

This is what you wrote....."If you stop mortgage payments without fully going over your situation with your attorney and trustee and without permission, you risk Plan dismissal." Total BS!!

Please explain to the rest of the class, HOW the Trustee will know if someone stops making a mortgage payment outside of a plan? Would not the mortgage holder need to file a Motion for Relief From Stay first? The Trustee does not "Check-up" on you to see if you're making your mortgage payments, they could care less! You DO NOT need permission to stop making payments on a Secured Debt outside of a plan. You can stop payments on a car, camper, motorcycle, ANY secured debt that you are making payments on outside of the plan without notifying the Trustee. You DO NOT have to tell anyone, about anything, with the exception of your Attorney. Your case WILL NOT be dismissed.

[Flamingo]

Oh yes...I read your response - In fact, I have read many, many of your responses. Time and time again, you sound as if you're working for a Trustee! You have a discharge of Chapter 13 for 5 1/2 years now? I question if you were ever involved in one? I read SCARE TACTICS in your posts.

This is what you wrote....."If you stop mortgage payments without fully going over your situation with your attorney and trustee and without permission, you risk Plan dismissal." Total BS!!

Please explain to the rest of the class, HOW the Trustee will know if someone stops making a mortgage payment outside of a plan? Would not the mortgage holder need to file a Motion for Relief From Stay first? The Trustee does not "Check-up" on you to see if you're making your mortgage payments, they could care less! You DO NOT need permission to stop making payments on a Secured Debt outside of a plan. You can stop payments on a car, camper, motorcycle, ANY secured debt that you are making payments on outside of the plan without notifying the Trustee. You DO NOT have to tell anyone, about anything, with the exception of your Attorney. Your case WILL NOT be dismissed.

Uh, I don't know where you are getting your information from or if you are running scared because you stopped your payments and increased your disposable income during your Plan by doing so without trustee permission so that money cannot be distributed to your other creditors and then you advise to rent the house and cash the rent checks? Now I am asking you instead - Are you for real?

A mortgage payment made outside of the Plan is still part of a filed Chapter 13 bankruptcy. That mortgage is part of the bankruptcy and the mortgagor receives the bankruptcy paperwork after filing. Most peoples' accounts are then transferred to their BK section as many on here can attest. Payment of that mortgage is required during the Chapter 13. Not to make that payment risks dismissal. People can't even purchase a vehicle during a Chapter 13 without trustee permission and according to your posting you believe they can stop making mortgage payments on their house which is part of their bankruptcy filing and rent it out and pocket the money? You ask, "How the Trustee will know if someone stops making a mortgage payment outside of a plan?" When the BK court receives a notice from the mortgage company that payments have stopped.

I don't work for a trustee but I do work in the legal world and we successfully completed our Chapter 13 Plan. The only information in my posts which you believe are scare tactics is to prevent someone from getting into serious trouble with their plan by not reporting information that needs to be reported and indicating what can happen if they don't (and yes they do go to their attorney to report the information and the attorney, in turn, consults with the trustee as necessary. Nonpayment of a mortgage included in the Plan is a huge financial issue and will be brought to the Trustee's attention). I certainly don't advise fraudulent activity as is indicated in your posting.

Best of luck!

[HHM]

Okay, let's all back up for a moment.

Whether and to what extent you need to notify the trustee depends on the trustee information sheet you were provided and practice of the chapter 13 trustee that is overseeing your plan.
Also, it depends on whether your plan was filed under 1306 or 1327 of the BK code (most plans are filed under 1327). The difference relates to whether the debtor's property vest back to the debtor upon confirmation, in 1327 plan it does, in 1306 plans, it does not. (beyond the scope here to discuss the strategic difference). If you are in a 1306 plan, then all of debtor's property is still property of the BK estate, in which case, some sort of notice would likely need to be given. To find out, your chapter 13 plan will reference the code section or will say somewhere in the narrative language, "property of the estate vests/does not vest to the debtor upon confirmation" (or some variation)

In any event, a move across the country, by itself, does not need to be reported directly to the trustee but YOU MUST file a change of address with the BK court.
Heman is correct, at least in principal, that the plan remains the same, there is nothing that needs to be done. Unless YOU need to modify it to decrease the payment.
HOWEVER, if there is an increase in INCOME; many trustees do have a certain percentage that the debtor must report (this will usually be spelled out in the trustee information or instructions form). Note, a decrease of "expense" that results in increased disposable income definitely does NOT need to be reported.

As to the house...
1. you need to ask yourself, do you really want to become landlords (it is a hassle).
2. could you even charge enough rent to cover the mortgage?
3. If you surrender, all you do is stop making payments. The bank will eventually file a Motion to Lift Stay in your BK (at which point everyone finds out). However, most of the time, nothing really comes of it, you surrender the house, the bank forecloses, so long as you make your PLAN payments, the plan will simply proceed.

[andy158]

To the poster who suggested renting the house out. Rental property is why I am here. One lawsuit involving a fire set by one on my tenants burried us.

[8forme]

We have ABSOLUTELY NO intention of renting it out. We will let it go to forclosure 100% positive.

I am just confused on the rent issue. Just wondering if we can rent somthing up to our mtg. payment or only what is allowed on the IRS site, which is about half of our mtg. payment. Being a family of 10 there is no way the IRS allowance will work for us. We should know definitely about the second week in Jan whether we are moving or not. Then I will pepper our attoreny with all these questions.

[HHM]

Keep in mind, unless your trustee information sheet states otherwise, I don't think you have to disclose the new rental amount, and you should try to save money.

Now, let's back out and pretend you haven't yet filed BK, if you are a renter, you are ONLY allowed the IRS amount. The reason you can claim a higher mortgage than that IRS amount is because the means test allows you to deduct payments to secured creditors. If you rent, that is a lease, and receives different treatment in BK. To get a higher than IRS amount on rent, you generally need to prove that it is the prevailing rent for the area.

[8forme]

Keep in mind, unless your trustee information sheet states otherwise, I don't think you have to disclose the new rental amount, and you should try to save money.

Now, let's back out and pretend you haven't yet filed BK, if you are a renter, you are ONLY allowed the IRS amount. The reason you can claim a higher mortgage than that IRS amount is because the means test allows you to deduct payments to secured creditors. If you rent, that is a lease, and receives different treatment in BK. To get a higher than IRS amount on rent, you generally need to prove that it is the prevailing rent for the area.

So since we have already filed, then the IRS amounts for rent don't come into play? We are also a CH13 no way we qualify for a 7, we make over double the median so the means test doesn't pertain to us anyway, right.

We are actually going to be renting something in the ballpark of about $500/month cheaper than our mtg payment is. But, we will have to account for a larger tax bill as the only deduction we can take is the mortgage interest and we won't have that anymore. (We don't even get the kids deduction!)

[newbie2]

So since we have already filed, then the IRS amounts for rent don't come into play? We are also a CH13 no way we qualify for a 7, we make over double the median so the means test doesn't pertain to us anyway, right.

We are actually going to be renting something in the ballpark of about $500/month cheaper than our mtg payment is. But, we will have to account for a larger tax bill as the only deduction we can take is the mortgage interest and we won't have that anymore. (We don't even get the kids deduction!)

This is how it is handled in my district (yours may vary): Our attorney said to wait for the job transfer to take place, and then contact her. At this point she would notify the trustee that the house was going to be surrendered and that we would be submitting new income & expense forms once we knew of the costs of living in the new state. Estimated total time to have our plan modified to account for a new housing amount (rental) and surrendering of our current home was 3-4 months. All expenses would be re-evaluated, income tax increase included.

Good luck to you.

[Flamingo]

This is how it is handled in my district (yours may vary): Our attorney said to wait for the job transfer to take place, and then contact her. At this point she would notify the trustee that the house was going to be surrendered and that we would be submitting new income & expense forms once we knew of the costs of living in the new state. Estimated total time to have our plan modified to account for a new housing amount (rental) and surrendering of our current home was 3-4 months. All expenses would be re-evaluated, income tax increase included.

Good luck to you.

This is exactly what our attorney told us in the event we had any changes or circumstances arise during our Chapter 13 as my husband was looking into a job in CA and we lived on the east coast but it was all just a question at the time. However, under no circumstances were we to stop mortgage or plan payments until trustee permission was obtained. Our mortgage payments were also made outside the Plan.

Everyone's situation/plan is different - consult one's attorney for advice directly as they know your financial situation and circumstances the best.