Mortgage Payment Expense Means Test Surrendering Home

[dingdong]

[Sleepy]

This is a subject I am thinking over as well. Some here on the forum say if I plan giving up the house, stop paying now before filing. But can I claim it on the means test part2? Or would I put my new (lower $) rent payment in it's place? I'm probably trying to have my cake and eat it too!

[dingdong]

What district in Colorado are you in? I can see if I can find anything that might help you.

[TEW]

Yup thats what I did. I stopped paying on my house and car the day after i filed.

[Sleepy]

I'm in Pueblo, Co. THANKS!

[StartingOver08]

Yup thats what I did. I stopped paying on my house and car the day after i filed.

This is what we have to do in our district too - if we are paying on it, we can claim it but if we are not paying on it, we can not claim it as an expense.

[dingdong]

[Sleepy]

Interesting stuff. I'll explore this further. Thanks Dingdong!

[dingdong]

Here is a link to Walker ( cited above)


Good stuff about expenses and means test.

http://www.magtrustee.com/caselaw/Westlaw707b2.pdf

Woops, had to edit, wasn't Walker , although Walker is cited.

I will find Walker and post if anyone is interested.

[Sleepy]

Very informative link. Obviously this could be the make or break deal on my means test on 7 vs. 13! I'll print it out and take it to the lawyer meeting next month. Rama Lama Dingdong!

[dingdong]

Rama Lama You are welcome!

Good Luck!

[question]

Ok so just to get some clarification... I am planning on filing and also surrendering my house.. I have not been late yet but I am not certain what to do... do I keep paying my house payment and let them know I will be surrendering it? Or do I just stop paying it now, look for a new place to live.. move and then file?

[DebtStinks]

I had researched this some as well recenlty. Here are a few that lost in CA:

Case No. 06-10924-B-7 (June 26, 2006)
Case No. 08-14549-B-7 (July 31, 2008)
Case No. 08-14555-B-7 (July 31, 2008)

[dingdong]

Well, I guess you don't want to go before the Hon Judge Lee in Fresburg if you are in foreclosure!.

I read his opinions and he really seems to focus on the "totality of circumstances" when deciding alledged abuse.

So basically, if you have a huge mortgage payment, which probably helped force you into bk because of an ARM or interest only loan , or whatever, he believes once you stop making those payments, you can pay your creditors in a 13.

Even though other judges have opined that those who drive hummers and have 6000.00 mortgage payments pass the means test with huge incomes, while the debtor making less than 60,000.00/yr and just trying to own a modest home are blocked at the gates by the "totality of circumstances" criteria.

I have read many cases in my district where mortgage payments were allowed. Just shows you how idealogy plays a role in the judicial process and how subjectivity cannot be your friend at times.

It seems objectivity really helps you to know where you stand and I know courts have always had a hard time discerning what Congress' intent is when it comes to legislation and parameters are not clearly laid out by statute.

So I guess the lesson for those living in the Central Valley is keep paying your mortgage until you file for BK, intend to keep the property and then walk away after w/0 reaffirming?

Planning is key , I suppose.

[DebtStinks]

It just shows how important it is to have an attorney that is very familiar with the local judges & trustees. I've spent a ton of time reading the case law/opinions as well... it's very interesting.

The solution to this "totality of circumstances" argument seems to simply stay current on your mortgage. You can file that your intention is to reaffirm while you make a good faith effort to negotiate a loan modification. Then you don't execute the reaffirmation and allow the foreclosure post discharge.

Now I'm not sure what happens if the judge denies your reaffirmation on the grounds that it would create an undue hardship on the debtor. Would this mean that you are forced to surrender the home in bankruptcy and this once again opens the door to a "totality of circumstances" argument even though your intention is to keep the home? I haven't come across any cases like this.

The sad fact of this is that the current bankruptcy code seems to favor the debtor that has pushed themselves to live way beyond their means. The debtor that is hurting just as bad but was very frugal in regards to their secured debt will often find that they are not passing the means test because of too much DMI.