Alroth, a house and a car are treated pretty much the same, but there are two different issues that come into play. The first question is, what is your DMI? In calculating your DMI, the trustee doesn't want you to include a housing expense as high as your mortgage payment. He's not directly saying that you have to give up your house. It's just that if you pay the plan payment calculated using a lower mortgage/rent payment, you won't be able to make the mortgage payment and the mortgage company will likely foreclose. If for some reason there is no foreclosure, you could keep the house and the trustee wouldn't really care as long as you have no non-exempt equity in the house. Once your plan payment is calculated based on your DMI, the second question is, does that plan payment pay enough to unsecured creditors to pay them at least the amount they would receive if your non-exempt assets were liquidated in a hypothetical Chap 7 (the Chap 7 liquidation test)? Your house is underwater, so you have no non-exempt equity. If you filed a Chap 7, there would be no non-exempt equity in the home for the trustee to liquidate and distribute to unsecured creditors. You don't have to pass the Chap 7 liquidation test, but you do have to figure out how to pay both your plan payment based on a housing payment that is lower than your mortgage and your mortgage payment. (I'm assuming for purposes of this explanation that you have no non-exempt assets).
The OP and her husband have several cars. When their plan payment is calculated, it probably won't include the expenses to operate and maintain all the vehicles (just like the calculation of your plan payment won't include your entire mortgage payment if the trustee gets his way). It doesn't mean they can't keep the cars, but they will need to scrimp somewhere in their budget to pay the expenses required to operate and maintain them. That's probably easier to do than to come up with the amount of additional mortgage payment that the trustee is saying you are overpaying. In addition to finding money in their budget to maintain the cars, if they have non-exempt equity in the cars, that plan payment has to be enough to satisfy the Chap 7 liquidation test. It may be that after filling out Schedules I and J, they show enough DMI to satisfy the liquidation test. But, if they don't, they will have to go back to their Schedule J and cut some expenses to show enough DMI to pass the liquidation test. The OP's husband's insistence that they keep the cars could make their Chap 13 more difficult than it otherwise would be. But, if they have enough DMI to cover the non-exempt equity and they don't spend a lot of money maintaining the cars, the cars may not make much of a difference. It sounds like the difference between paying your current mortgage payment and the payment that the trustee will agree to as reasonable is big enough for you to be unable to keep up that mortgage payment and make the plan payment the trustee is insisting on.
I don't know if I'm explaining it very well. I hope this helps.
The OP and her husband have several cars. When their plan payment is calculated, it probably won't include the expenses to operate and maintain all the vehicles (just like the calculation of your plan payment won't include your entire mortgage payment if the trustee gets his way). It doesn't mean they can't keep the cars, but they will need to scrimp somewhere in their budget to pay the expenses required to operate and maintain them. That's probably easier to do than to come up with the amount of additional mortgage payment that the trustee is saying you are overpaying. In addition to finding money in their budget to maintain the cars, if they have non-exempt equity in the cars, that plan payment has to be enough to satisfy the Chap 7 liquidation test. It may be that after filling out Schedules I and J, they show enough DMI to satisfy the liquidation test. But, if they don't, they will have to go back to their Schedule J and cut some expenses to show enough DMI to pass the liquidation test. The OP's husband's insistence that they keep the cars could make their Chap 13 more difficult than it otherwise would be. But, if they have enough DMI to cover the non-exempt equity and they don't spend a lot of money maintaining the cars, the cars may not make much of a difference. It sounds like the difference between paying your current mortgage payment and the payment that the trustee will agree to as reasonable is big enough for you to be unable to keep up that mortgage payment and make the plan payment the trustee is insisting on.
I don't know if I'm explaining it very well. I hope this helps.
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