Having trouble keeping our heads above water.

[newbie2]

That may be the allowable amount but is that for someone making the same amount of money as this person? Or is the average salary more than that? Regardless of the allowable amount, they are still living well beyond their means for a mortgage.

I absolutely agree. But it's pretty obvious that the OP is going to buck anything we say about his housing situation.

[readytofile]

I absolutely agree. But it's pretty obvious that the OP is going to buck anything we say about his housing situation.

Hard to see the forest through the trees...yeah I see that. Shoot even if I did make tons of money I could never bring myself to pay 4k a month in mortgage. There are lots of nice places you can live that cost much less than that. I have trouble accepting that my mortgage is what it is. If I hadn't refinanced a million times I'd still be paying $700 a month for the same house.

[backtoschool]

Out of curiosity I pulled up New York State at the US Trustees site. New York County has a rent/ mortgage allowance of $4559 for a family of 5 or more.

The next highest counties in the state for allowances are Nassau, Rockland and Westchester which hover around the $2500 mark for a family of 5 or more.

Perhaps the OP is in New York County and his mortgage expense is dead on? Who knows.

Regardless, monthly income will go down once the withholding allowances are adjusted to reflect -0- owed to the IRS. Proactive: If I didn't read clearly enough the OPS many posts and deciphered it all wrong, then I apologize in advance :-)

The OP would have to live in Manhattan or the Scarsdale or a similar area to have an allowable monthly expense of $4,500 for the mortgage. If the OP lives on Long Island or further out in Weschester, then the mortgage amount is probably over the allowed amount.

[lulabelle]

I know that some of these things are really hard to hear. If someone told me that I absolutely had to move out of my home, I would feel pretty defensive and panicked about it, too. We get very prideful when it comes to our homes, and I can imagine that you would feel very embarrassed/uncomfortable explaining your decision to move out of a very nice home to your friends & family. However, these people know of what they speak. And they are really trying to help you. The bankruptcy process is grueling, emotional and uncertain. It's also often embarrassing when you are suddenly cut off access to credit, unable to take out a new loan, buy a different car, or have an employer informed of your bankruptcy, such as can happen in a CH 13. Are you prepared for it? Do you have other assets that you may risk losing if you file?

Bottom line is that many of us here know what the bankruptcy process is like and wish we had just one big glaring red flashing light staring us in the face; we'd be thrilled to find an option other than bankruptcy.

Your house payment goes against every practical, reasonable personal financial practice out there. If you find the BK Forum members harsh, give Dave Ramsey a call and see what he tells you about it. I have a feeling that if you could step back a bit and consider looking into other options, make the tough decisions (and believe me, selling your too-expensive house and renting for awhile would be easier than bankruptcy in the long run) that even just a year from now you would look back and wonder why you even questioned making the choice.

If after reading everything here, you still decide that your house is most important, everyone here will still support you and answer any questions you may have. I would also strongly suggest going ahead and scheduling some consults with bankruptcy attorneys as they could best advise you and your particular situation. Best of luck to you!

[rusty95]

Maybe it's time for a little education. I live in Suffolk county. Now I don't care what the IRS says but you can not live out here or any where else on the Island or the city area for 1650 a month. Not going to happen. Now you can look up houses all you want but you won't find anything under 400,000, unless you want to live in a crappy area where you are not safe. So if you look find out the good areas. Now if I sold my house, I will not get anything for myself out of it. That pretty well means that I will never own a house again. Because I will never be able to put together 200,000 for a down payment. That pretty well means that after making 20 years of rent payments I have nothing, where as after 20 years of paying a mortgage I have the house to sell. Now I realize that most of you posting here live in southern states and other places outside of the tri state area. I have friends that live in your areas and they can get a house for 200,000 that will put my house to shame. Plus you get very low property taxes. Mine are over 11,000 a year. That is probably a third of some of your salaries for the year. So unless you have experience in my area you don't know about how much it ACTUALLY costs to live here. Now about the 52% of my salary, the mortgage companies go by gross income. So if you look at it in the respect the house is less than 29% or right on target for this size of a mortgage. Unfortunatly the house stays.

Now one of you said to move to a different area and put my daughter in a private school, do you know what a private school costs, between 8 and 10 grand a year. Yes you heard it right. A good top of the line school costs that much. And her education will be no better than the one that she is getting now. So lets see 3500 for rent and then another 900 a month for a private school that comes out to 4400. It seems I am paying less now. Like I said before my daughter education is very important to me.

[Klesko]

Even if you use gross and your in the 30% tax bracket then your income is $11,440 and your payment is $4,900 which comes out to 43% of your income. That is still too much.

I do understand about the private school. I pay $8,000 a year for my daughter to go to one.

Your problem is you have no savings and cannot pay off your debts. If you hit any small bump in the road you are going to be forced into BK13 and that will be much worse long term then what I have recommended. Get this idea out of your head that your house is sacred and cannot be touched. Once you do that things will be much easier.

You need to rebuild and regroup and there are two ways you can do this with the information you have given us. Move into a cheaper house or make more money.

It is really that simple.

[rusty95]

We make 181,000 a year that comes out to 29%

[backtoschool]

Maybe it's time for a little education. I live in Suffolk county. Now I don't care what the IRS says but you can not live out here or any where else on the Island or the city area for 1650 a month. Not going to happen. Now you can look up houses all you want but you won't find anything under 400,000, unless you want to live in a crappy area where you are not safe. So if you look find out the good areas. Now if I sold my house, I will not get anything for myself out of it. That pretty well means that I will never own a house again. Because I will never be able to put together 200,000 for a down payment. That pretty well means that after making 20 years of rent payments I have nothing, where as after 20 years of paying a mortgage I have the house to sell. Now I realize that most of you posting here live in southern states and other places outside of the tri state area. I have friends that live in your areas and they can get a house for 200,000 that will put my house to shame. Plus you get very low property taxes. Mine are over 11,000 a year. That is probably a third of some of your salaries for the year. So unless you have experience in my area you don't know about how much it ACTUALLY costs to live here. Now about the 52% of my salary, the mortgage companies go by gross income. So if you look at it in the respect the house is less than 29% or right on target for this size of a mortgage. Unfortunatly the house stays.

Now one of you said to move to a different area and put my daughter in a private school, do you know what a private school costs, between 8 and 10 grand a year. Yes you heard it right. A good top of the line school costs that much. And her education will be no better than the one that she is getting now. So lets see 3500 for rent and then another 900 a month for a private school that comes out to 4400. It seems I am paying less now. Like I said before my daughter education is very important to me.

As someone who lived in the nyc area for ten years before I moved last year to the midwest, I think I understand the housing market there.

As someone who considered filing for bankruptcy in the nyc area and met with a lawyer, I was advised that it is virtually impossible to file chapter 7 if you have the kind of income and expenses that the OP has. The metro nyc area has a huge US trustee's office that tries every way possible to push people into chapter 13, especially if they are high-income filers like the OP.

Here is what will be contested by the US Trustee in the OP's scenario in my opinion:

Mortgage payment over the irs standards
Any car payments over the irs standards
personal expenses over the irs standards

[Klesko]

Can you give a breakdown of you pay then?

$181k comes to 15k a month gross, $10,101 net if you are in the 33% tax bracket. So where is the other $1,300 a month going? I am assuming retirement but break it down. It may help.

[rusty95]

Can you give a breakdown of you pay then?

$181k comes to 15k a month gross, $10,101 net if you are in the 33% tax bracket. So where is the other $1,300 a month going? I am assuming retirement but break it down. It may help.

Now this mine and my wifes combined. At least 800 goes to 401 k's and retirement. About 280 a month towards health benifites. Then you have union dues and 401k loans being paid back.

[lulabelle]

Now I don't care what the IRS says but you can not live out here or any where else on the Island or the city area for 1650 a month.

Unfortunately the US Trustee cares and that's the numbers they go by.

I do understand what you're saying though - you're in a tough situation. I don't know how you'll qualify for anything other than a 13, but maybe that will still be better than the situation you're in now.

Just one last piece of advice - be careful not to make assumptions about fellow poster's situations regarding income/where we live/how much we pay in taxes. You are not a "special case". Many of us live lives very similar to yours - we can all get in too deep and some of your statements are bordering on insulting.

[nerves]

Not sure how much your 401k loans are but maybe you would be better off applying the $800 a month you are contributing for retirement towards the loan amount. The funds are still going into your retirement account and you will be eliminating a debt. After you pay the 401k loan in full, use the amount you were applying to the401k loan towards your other debt and start contributing $800 again to your retirement. The benefit of doing this is if something would happen to your job, you would eliminate the tax issues and you would be paying off more debt. As for your home, after the tax deduction for the interest and taxes, you really aren't at 29% - it is actually less. I agree with others that you have a hefty mortgage and it would be best to find something more economical if possible. You may want to keep your eyes open for any foreclosures in your neighborhood and try to get a similar home for less money. JMO.

[NoMoreCards]

I wanted to add one more thing about the house. Although I agree with the others that it is simply beyond your means the decision in how you want to live is yours alone.

When your children get older, they will not so much care about WHERE they lived but will cherish the memories of growing up. Many of these memories for most people include vacations and family time spending time together. As long as you live to pay for that house, these opportunities will be very limited.

So do the math and figure out if you want to be the parent that is slaving to pay for something that keeps you financially strapped, or if you want to be the parent that has time and money for that precious quality time.

Please don't take offense, but your financial condition does reflect in the type of parents you are. Stress, working overtime, constant worrying and all are a weight on our shoulders.

Think carefully and make the decision that is best for your family in the long run, not just today.

[BrokeOR]

Rusty,

I echo everybody's sentiments, especially that this is an intensely personal decision. But, if you take nothing else from this conversation, you might do well to examine your idea of "musts" and "can'ts" against the hard rules and acceptable limits of the Trustees in your area. A good lawyer, in an initial (and free) consultation will be able to assess your situation and advise you as to exactly where you stand. Then you won't have to guess-you'll be informed based on the laws and limits in your area.

One more thing...You assert the value of your house is $575,000. Hopefully, you have done a true analysis through a local realtor as to your actual market value. Relying on things like Zillow and "list" prices is a poor determinent of actual value in today's real estate market. The same is true, in many areas, of tax assessed value. Especially in areas with great schools and good amenities, tax assessment is often very inflated versus true market value. Again- a good attorney will tell you to do this BEFORE making any final decisions as to whether or not you choose to keep you home, as they are seeing too many people who are making emotional decisions that are eventually going to land them back in hot water, financially speaking.

Bottom line: Feel free to ignore all of our advice, bourne out of experience-often harsh experience. But you will not be able to ignore the Trustee's hard rules. See a local attorney, and find out where you're at. It's the best play for you at this point.

[flyinbroke]

Unfortunately, the trustees go by IRS standards. At least you get the mortgage exemption; rental exemptions for the IRS is half of what mortgage people get. We know the IRS standards are WAY lower than what reality is...unfortunately that is how the game is played. As for house value...in today's market it is worth what someone will pay for it. As brokeOR says, tax rate values are way overinflated so the city can recoup more of your money. Zillow and its ilk rely on property tax records and their appraisals are way more than what properties are actually selling at.

Echoing what Lula says in that some of your posts are condescending and border on insulting. My neighborhood rivals your property taxes and I am almost as south as you can get without crossing the border. Bottom line: from what I have read so far is that you have way too much money left over to file a 7. Get a lawyer and you will know for sure.