passing means test.....

[mickeysfriend]

I'm so confussed!

We're hoping to pass the means test and file chapter 7. We're 2 months behind on our 1st mortgage and 1 month behind on our 2nd. I dont think we are able to keep the house because we cant get caught up. So when working on Schedule J and the means test, do I use those payments? I think we need to stop paying the mortgage so we can pay our attorney. so if we're not making the payments does it still apply?

[justbroke]

Good questions. The Schedule J is (arguably) "forward-looking". That means, that if you won't have that payment, then you can't claim it as an expense on your Schedule J.

First, can you afford the house? That's the first thing I'd determine. If you can afford it -- forgetting about the arrearages for now -- then do you want to keep it??? Do you have any equity in it, or are you totally upside down? Do you plan to move/sell in a few years anyhow? All of these are part of "planning"...

Some pre-Bankruptcy planning may be in order for you. Is there anyway to bring the mortgage current? Maybe ask the Bank for a Modification (moving the arrearages to the end of the Note)? (Modifications can take 45-60 days to approve.)

Then you'll be caught up, and then can file with your HOUSE in tact and being used as an expense on your Schedule J!!!

[Phillymanhere]

work with your lawyer on this, because even as you stop payments you will at some point (when you get kicked out) have to pay rent. And so that's a very predictable expense and you can put that expected rent down .... But run the details of this by your attorney.

The general answer is that the amount you'll be able to list will be roughly the amount allowed under the IRS national standards for renting in your area. Work the details with your lawyer. But you will have to live somewhere and every court knows that.

[Cali]

Philly - My rent was over the national standards and we were allowed to put it.

[rilbrianne]

You should still put your house payment because it's still one of your bills. That's the whole reason you are filing bankruptcy, you need to show your expenses - regardless of whether you are behind or not. You may be able to keep your house if you are able to make the payments during the bankruptcy but that is up to you.

If you still aren't sure, call an attorney and ask- I did. I left a message and he called me back, I asked him one simple question, got an answer and was on my way. It only took one minute of his time and he was kind enough to give it to me. Don't be afraid to call and ask one small question.