Mortgage payment deduction on Means Test when surrendering the house...Yes or No?

[UpsideDown]

We've decided to convert from Ch. 13 to Ch. 7. We currently pass the means test, and are considering surrendering the house, but we're concerned if we change our statement of intentions to surrender, the mortgage payments won't be allowed as a deduction and therefore we won't pass the means test.

I've read it can go either way. Does anyone have any experience or knowledge about this...especially in the Middle District of FL (specifically Tampa)?

Does anyone know of any actual District or Circuit Court case law on this?

We're waiting for our attorney to get back to us on this, but I'd like to be armed with as much supporting info as I can. Our attorney seems to be pretty inexperienced.

[DebtStinks]

Check out this thread

I've been researching this exact issue. There is some good info on this in my follow up posts.

[UpsideDown]

Thanks for the quick reply. This is our major issue right now and I'm really stressing over it.

[DebtStinks]

I totally understand as I'm working to plan our BK and this will be concern for us as well.

From what I've gathered thefact that you file to surrender will not affect your pass/fail on the means test. But what it will do is open the door to a petition from the US Trustee to have your case dismissed on the grounds that you COULD afford a chapter 13 based on your forward looking financial situation without the house. This also assumes that you surrender the house before your case is dismissed.

Really only a good lawyer will be able to advise you on this. I haven’t gotten to the point where I’ve spoken with a lawyer… but my idea on this is not to file to surrender and make a good faith effort to modify the terms of my loan. The foreclosure and/or loan modification process takes many months here in CA and our BK should be long closed before we actually have to give up the house.

Let me know what you find out from your lawyer!

[DebtStinks]

I'm surprised there aren't more people that have been though a BK with a house they were also foreclosing on. Like the OP I'd love hear what some people have actually done in this situation and if they were allowed to use the mortgage payments as part of their means test without objection.

Thanks!

[laurannm]

The fact that you are surrendering COULD impact your means test, it just depends on how your district handles the issue. Several judges have issued rulings on this issue. Some have said you can use the mortgage payment on the means test if you are surrendering, others have ruled that you cannot. If you search around on these boards or just Google and you'll find the rulings.