How much house payment is too much?

[Bit_Image]

I read on another thread here that $1900 per/mo house payment is too much, even if you pass the means test. My question is, in Kansas where my primary home is exempt, is there a maximum dollar amount that a house payment can be before I could be pushed into a chapter 13? I have some equity in my house and I want to keep it. My mortgage is $800 per/mo and 2nd is $200

[CindyLou]

i would say that should be relative to your income. They say the rule of thumb should be no more than 30% of gross, but personally my own rule of thumb is NO MORE than 30% of take home...preferably even a little less than that to be safe.

[JRScott]

I'm not sure how much is to much. That would depend on your trustee and your district as it seems to vary by district.

As a basis for life though in order to remain in good economical shape I would suggest keeping it to no more than 30-35% of your net income.

[CityGirl]

I'm so glad I'm doing a 13 instead of a 7. I dont have to worry about any of that. I would much rather pay my creditors at least SOMETHING, get rid of my guilt and my payment will be 1/3 of what it is now and all lumped together instead of 22 payments I now make.
My income fluctuates too which is great because I can push for making more and my trustee won't even check that. I lucked out! AND this BK will be off my credit report so much sooner then a chapter 7

[BKOnce]

The sky is limit.... as long as... you can pay?...that is..?

[sickandtired8]

I'm so glad I'm doing a 13 instead of a 7. I dont have to worry about any of that. I would much rather pay my creditors at least SOMETHING, get rid of my guilt and my payment will be 1/3 of what it is now and all lumped together instead of 22 payments I now make.
My income fluctuates too which is great because I can push for making more and my trustee won't even check that. I lucked out! AND this BK will be off my credit report so much sooner then a chapter 7

You want to make a bigger payment to the trustee? I have never heard of someone being happy to be in a 13 rather than a 7. S&T

[freshstart06]

I agree S&t, are there advantages to chapter 13 over chpt 7 especially with people with no assets??? I can understand if you have assets and own property but other then that what is the advantage???

[BKTango]

Even if you have assets, that still wouldn't make you have to file a 13, only if you wanted to keep them and have fallen behind on payments, a chapter 13 will allow you to do that. Those of us that have filed a 7 with several assets, as long as they fall under the exemptions they are safe. I certainly wouldn't choose a 13 over a 7 if I had a choice. Unfortunately the new laws kinda takes the choice out of it. I walked out of my chapter 7 with my home, all of our vehicles, a travel trailer and all of our posessions. It was all exempted. Some people think if you file a 7 you automatically lose everything. That's not always the case.

There are advantages and disadvantages to both.

Chapter 7.
You are over and done with in a matter of a few months, given it's a simple case.
You can move on with your life and start rebuilding the day after discharge.
You can go buy what you want (new car..etc.) after discharge if you want to pay a little higher interest rates. And want to get in debt all over again.
You might lose a few of your things, including your current tax refund, if you are not able to exempt them.
Regarding secured items (cars, homes) you have to either reaffirm the loan or surrender the item, unless it's paid for and exempt. However some of us are stll getting by with ride-throughs.
It stays on your CR for 10 years. But on the flip side of that most have already rebuilt their credit starting shortly after discharge and usually within 2 years after discharge you are able to obtain loans with fairly normal interest rates, buy a home, etc. . Some folks end up with better scores than when they started. So the 10 yr factor doesn't really...sting you that much.

Chapter 13.
If you want to keep your home or car and are behind on payments...this is the thing for you. It allows you to make up those missed payments in the plan.
If you feel morally you owe the creditors something and want to pay, a chapter 13 might be the way.
ALL of you disposable income goes to the trustee.
If you have too much equity in your home/car. Again, a chapter 13 will protect those assets.
Most of your things don't even come into question as in a 13 all of your possessions are yours too keep.....except your money.
Any income increase/decrease significant enough to make a difference is required to be reported to the trustee...so they can take more or less. Some people have very lenient trustee's and don't bother with this too much, as long as your planned payments are on time every month they could care less what you do. But some are sticklers for the letter of the law.
It's up to your trustee, but it's common to have to surrender your tax refund every year. Not all require this, but quite a few do.
You are not allowed to sell anything or take on any new debt without the trustee's permission the entire time you are in an active 13, whether that's the whole 3 or 5 years. If you need a new ride....you have to have permission to go get it. Need to sell the old junker sitting in your drive way, you have to have permission.
It's off your CR in 7 years, also it looks a little better than a ch7 because you have been making on time payments. But this is where it can be said that someone in a 7 has already built their scores back up, so the remaining 3 years it's on their reports doesn't effect them too much.
It's known there are no debtor's prisons, but those in a chapter 13 would probably disagree.

[keepmine]

I walked out of my chapter 7 with my home, all of our vehicles, a travel trailer and all of our posessions. It was all exempted. Some people think if you file a 7 you automatically lose everything. That's not always the case.

AMEN! Upon discharge of my Chapter 7, I had a net worth of +$90. The equity in my home plus, my IRA and 401K were exempt.
No way I'd file a 13 if I quaified for a 7. BK is a business decision. You need to act like a good capitalist and maximize your return. Heck with credit reports and guilt. Do what keeps the most money in your pocket.
Getting back to the OP's question. A BK is wothless if you can't support yourself comfortably post bk. If you are struggling to make the mortgage payment and you have no unsecured creditors you're paying, you got too much house.

[lrprn]

As a Ch 13 filer, if hubby and I had qualified for a 7, we'd have taken it in a heartbeat. But we didn't - our combined incomes were too high and after 27 years had way too much co-mingled debt for either of us to file alone.

We're thankful under these circumstances for Ch 13 because without it, we'd be at the complete mercy of our oh-so-understanding-and-helpful creditors who I'm certain would be jumping at the chance to save us from swirling the financial drain.....(Hah! Way more likely they would be throwing us an anchor!! )

You do what you have to do. Sure Ch 13 is hard, but it's over in three to five years. Never-ending, increasing debt with no chance in he** of ever getting out from under it is far, far worse.

[newbie2]

My income fluctuates too which is great because I can push for making more and my trustee won't even check that. I lucked out! AND this BK will be off my credit report so much sooner then a chapter 7

That's odd. We have to send in our tax returns to the Trustee every year. We were also told to notify our attorney of any change in income (increase or decrease) so that the plan could be adjusted accordingly. My husband is due a promotion at the end of the year with a corresponding raise, so I can only assume the Trustee will take that to put into our plan.

Did your attorney tell you that you don't have to apply all extra income to your plan?

[CityGirl]

My Attorney said my trustee doesnt ask for anything year after year OR a change in income. I lucked out!

That's odd. We have to send in our tax returns to the Trustee every year. We were also told to notify our attorney of any change in income (increase or decrease) so that the plan could be adjusted accordingly. My husband is due a promotion at the end of the year with a corresponding raise, so I can only assume the Trustee will take that to put into our plan.

Did your attorney tell you that you don't have to apply all extra income to your plan?