keeping the house, but only short-term.

[geye]

We were planning on keeping but not re-affirming the house (should be filed on or around August 1...just waiting on the attorney at this point), and then stopping payments this winter. This would give us a move-by target of May or June of next year.

BUT, I started shopping for rentals So now I'm wondering...what is the earliest that we could stop making payments and not mess up our filing? At what point do they NOT use the mortgage payments for calculations, and what number would they use if I'm not in a lease? The IRS standard? If I'm in or going to be in a lease (on a home, not an apt), am I still allowed to claim something for home maintenance? We'd still need to mow the lawn, etc.

We're under median so passing the means test is not an issue. Schedule J is what I'm worried about. Potential rent would be anywhere from $200 less per month to $100 more, but without entering a lease does it even matter? The IRS average for housing is on the low side, and $234 less per month than our house/taxes/dues.

My property tax bill arrived today. It's not due until mid-September, so I'm also not sure if we should pay it knowing we'll be leaving the home. I have no idea if we're still liable for those taxes. Homeowner's and dues are paid up through next July, so that's not an issue.

The sooner we stop paying, the sooner the house forecloses, and the sooner we'll be able to buy a new home. The sooner we move, the sooner DH can cut his work commute in half.

OTOH, I don't want to mess up the bankruptcy, and the longer we can stay here rent-free the more start-over money we'll have.

Thoughts?

[gmk]

This is a case of what works in your district. We stopped paying our mortgage 4 months before filing and in our district we were allowed to include the home payment in our means test (over median) and on our schedule j even though we were surrendering the house. I've read that other districts view this differently.

This is where an attorney, savvy to what plays out in your district comes in.

How long you can remain in the home w/o paying also depends on your state's foreclosure regs. Some states, like mine, have a long time before your forced to move - typically over a year after payments stop.

[geye]

I know how long I can remain without paying. I don't know how my timing can/will effect the bankruptcy. I also don't know about the property taxes.

I do have a call into my attorney, but he was in court all day so I haven't heard back yet.

[geye]

OK, I'd really like some advice.
We spoke with the attorney, but I suspect he hasn't even looked at our paperwork yet, so his advice can't be based on our actual numbers.

He's saying to quit paying now because we're throwing money away. Don't make the payments, don't pay the property taxes. He said the IRS standard would be used on the means test (I get that) and to just print out some rental listings for homes we're looking at, and he'll use those numbers on our schedule J.


Does that sound right?

With the IRS average being under what most rentals are going for (at least for a home that will fit 4 kids), I'm concerned the trustee would consider that money disposable income.

[researchnerd]

Similar to gmk, we stopped paying our mortgage as of January 1 and filed at the end of May. We were still able to use our mortgage payment on Schedule J, even though we moved to a rental home in March and had a signed lease. I think the logic is that as long as you own the house, you're still technically on the hook for the mortgage payment. If your attorney thinks it's OK, I'd say it's fine to stop paying now for an 8/1 filing.

[UpaCreekinCA]

Keep making your house payment (assuming you can) so there is not question about that. Don't reaffirm it in the BK. Either negotiate a favorable modification (you are in the driver seat, it won't hit your credit, you aren't liable for it and your lender doesn't want the house back) or stop paying and wait for a sale date then shop for a rental or short sell to a friend or family member. That is my plan.

[jlmaca]

I've made 2 payments (Aug & Sep 09) since January of 09. I'm waiting to be sued for foreclosure and at the same time trying to short sell the house. No one seems to be in any hurry here.

[geye]

It looks like it might not matter...from what I'm reading, in this area the disposable income to fund a chapter 13 is based off the second half of the means test

Even taking out the house payment and using the IRS housing standard, we're at a couple hundred per month negative on that.

[Fallonedward]

Keep making your house payment (assuming you can) so there is not question about that. Don't reaffirm it in the BK. Either negotiate a favorable modification (you are in the driver seat, it won't hit your credit, you aren't liable for it and your lender doesn't want the house back) or stop paying and wait for a sale date then shop for a rental or short sell to a friend or family member. That is my plan.

In a Chapter 7 as you described above --- "Keep making your house payment Don't reaffirm it in the BK" If I do this and say 10 years down the road I want to sell when the economy is better, do I own the house or the bank? thanks