Is the trustee allowed to make judgements?

[SinkingFast]

Actually, prior to the recent really low rate period, ARM's had a great track record of actually being lower over the long haul than Fixed Rate Loans.

We had ARM's in the past and that did prove to be the case. We did better on the interest rates, over the terms we held the notes, with ARM's than we woulda with Fixed Rate notes.

But when Fixed Rates are at a 40-50 year all time low,......... You can bet your butt, if you take out an ARM then, that ARM is gonna do nothing but go up from there. Most likely for the life of the loan, until you reach the Cap, anyway. And probably won't go back down much, if any, either.

[SinkingFast]

Time4Cake:

I filed BEFORE the new rules, so I didn't have to pass the means test....my situation is totally different and not relavant, so I can't help you! Sorry :-)

Just wanted to tell you, Wenderful, that NY is a Judicial Foreclosure State. If you don't beat the clock trying to sell, you're gonna have a while anyway.

Lenders always go Judicial in NY. Evidently they want to perfect the Title, and there musta been problems going non-Judicial in the past. So you'll have the benefit of a lengthy process.

[Jenny]

I don't think it's illegal to give someone a mortgage for the maximum amount they can possibly afford. How can taking out a mortgage be a matter of survival? Anyone who can qualify for a mortgage can find a place to rent or if not at least friends or family to stay with. Banks are greedy in that they want to make as much money as possible off you. People are greedy because they want the most stuff and the most money they can get.

SF, you're right. ARMs used to be a good deal, but anyone who took one out when 30-year fixed rates were at 4-6% was just plain nuts.

[SinkingFast]

We don't have any family to depend on either, Wenderful. And our friends, the kind who would help out in a situation like this, are all 600 miles away.

We too survived on CC's. There was some frivolous spending, but that's just a drop in the bucket of the total debt. We have/had a house that sucked us dry. And we let it. It was the driving force behind the other debt.

I completely understand about your race. We're in the same spot. Our lease on this house is up the end of July. We've had a little spat with the Landlord so I don't imagine we could stay beyond then if we wanted. We haven't even filed BK yet. So going 90 days out or back, whichever, is gonna put us tight on time about finding another place to rent.

I feel your pain. UGH!!

[Jenny]

I didn't mean to be insulting. I guess I don't understand New York law. I didn't think "predatory lending" was a legal term. I always thought it was a social-type term. The mortgage industry is pretty heavily regulated as far as I know. I would think if you took out a loan that you knew was illegal, the contract would be void. Like borrowing from the mob or something.

There was another thread here not too long ago about starting a business on eBay. Starting a business, whether on the Internet or in a brick-and-mortar place, is really risky. Unfortunately, most small businesses fail. It takes a tremendous amount of strength, dedication, and knowledge to make it.

[SinkingFast]

I didn't mean to be insulting. I guess I don't understand New York law. I didn't think "predatory lending" was a legal term. I always thought it was a social-type term. The mortgage industry is pretty heavily regulated as far as I know. I would think if you took out a loan that you knew was illegal, the contract would be void. Like borrowing from the mob or something.

There was another thread here not too long ago about starting a business on eBay. Starting a business, whether on the Internet or in a brick-and-mortar place, is really risky. Unfortunately, most small businesses fail. It takes a tremendous amount of strength, dedication, and knowledge to make it.

Predatory Lending is most definitely a legal term.

We were scammed by a Predatory Lender.

We refi'd with a Broker type company. Instead of LendingTree.com, people walk into their office. They have a whole array of Lenders they work with.

Our whole refi was based on a super inflated appraisal.

In August of 2002, their appraiser valued our house at $252,000 and we currently have a contingent offer of $215,000.

The market our house is in has been in a boom the last 2 years. There's no way that appraiser could have gotten that value back then when, after 3 years and tremendous market growth, we can't even sell it for that today.

That's Predatory Lending!

[SinkingFast]

It was an investment, I am a residential builder, but I wasn't counting on 9-11 and the housing market tanking. I was going to live in it for two years, take the capital gains treatment allowed on your primary residence by the IRS and move to a smaller house. Two years came and I tried to sell the house. No bites. That simple. It was an investment.

Time,..........

We come from all walks of life here.

No need to explain. We're all in the same boat.

None of us by choice, I assure you!!

[Jenny]

I hate it when people blame the terrorist attacks that happened on September 11, 2001, for their problems. Thousand of people died, and you hide behind that. You decided to build a house without having any money. I don't want to talk to you anymore.

[SinkingFast]

I hate it when people blame the terrorist attacks that happened on September 11, 2001, for their problems. Thousand of people died, and you hide behind that. You decided to build a house without having any money. I don't want to talk to you anymore.

Jenny,.............

You have some serious problems.

9/11 did create serious economic problems that rippled thru the entire country. All sectors felt it. And not just in the USA. Other countries as well were affected.

Just like we are still feeling Hurricane Katrina. We've paid unGodly gas bills this winter.

What planet do you live on that you can't figure these things out??!!

Do you know nothing about social economics???

[aa06a47]

First please note that my house is fully exempt for the purposes of this question. My mortgage deduction on line 42 of the "Means Test" will be $4,420. Can the Trustee tell me that my mortgage is too high for my income, effectively forcing me to move from my residence and thereby making me inelligible for Chapter 7?

I am told by my attorney, that as of this date / time in this new law, your secured debt is taken for actual payments....that it could change later on. Due to your income, you may be forced into a chapter 13, but with that large of mortage expense, ect..you may fail to have the 100/month required to pay into a Chapter 13.

I am going through this process right now...here is the way I understand it works......there are 2 parts to the means test. The first part, which basically is the income part and standard irs deductions.......if you flunk that, then you fill the rest of it out. This is where you show your actual secured debt payments and other mandatory stuff. If you flunk that, you are chapter 13, which requires you to pay at least the amount your creditors will get if they liquidate. If your that upside down in your house, you will not have to pay much, especially with that expenses. I bet if you get a good lawyer, your talking a chapter 7 and you can lose that large house payment.

[time4cake]

I am told by my attorney, that as of this date / time in this new law, your secured debt is taken for actual payments....that it could change later on. Due to your income, you may be forced into a chapter 13, but with that large of mortage expense, ect..you may fail to have the 100/month required to pay into a Chapter 13.

I am going through this process right now...here is the way I understand it works......there are 2 parts to the means test. The first part, which basically is the income part and standard irs deductions.......if you flunk that, then you fill the rest of it out. This is where you show your actual secured debt payments and other mandatory stuff. If you flunk that, you are chapter 13, which requires you to pay at least the amount your creditors will get if they liquidate. If your that upside down in your house, you will not have to pay much, especially with that expenses. I bet if you get a good lawyer, your talking a chapter 7 and you can lose that large house payment.

Thanks for the confirmation of what I did believe was the correct interpretation of the "Means Test." Based on the explicit instructions on the Means Test I believe I absolutely qualify for Chapter 7. However, my concern more specifically is that the Trustee be allowed to make a knee jerk "Judgement" after only reading my income level, because it seems so many others do (including most attorneys). I hope that the trustee is emotionless and regimented in their decision process and just follow the rules.

Thanks again for your comments they were good to read.

[SinkingFast]

Thanks for the confirmation of what I did believe was the correct interpretation of the "Means Test." Based on the explicit instructions on the Means Test I believe I absolutely qualify for Chapter 7. However, my concern more specifically is that the Trustee be allowed to make a knee jerk "Judgement" after only reading my income level, because it seems so many others do (including most attorneys). I hope that the trustee is emotionless and regimented in their decision process and just follow the rules.

Thanks again for your comments they were good to read.

Trustees are supposed to be impartial and non-judgemental. But they're human. They have good days and bad.

Be prepared to answer some questions as well.

Our kids are older teens. One is in college already. And we have an elderly parent living with us. At least 2, maybe more, attnys grilled us about our rent payment. Why it was so high. How long will son continue to live with us. How long will parent continue to live with us. Will the younger 2 children be at home much longer.

I think the attnys were prepping us along the lines of the Trustee's thought processes. "They won't need a house that big for much longer. That rent is ridiculous and we're not going to allow it."

We've been doing a little house and apartment shopping here and there. Partly to get ready for our move this summer and partly to be prepared with info in case this issue arises in our BK. So we can have addresses and rents available to show how much we'd have to pay for suitable housing elsewhere.

[time4cake]

Looking at it in a new way

Concern: Can the trustee remove my secured debt deduction and force me into Chapter 13.

Lets assume the trustee can do just that. They remove my secured debt deduction from my Means Test, and now I am forced to convert to chapter 13.

In Chapter 13 the secured debt deductions comes back again. The language is the same. The trustee has to either deny it or accept it when calculating disposable income.

If they accept it, I have negative disposable income and therefore no payment in Chapter 13. In that case the unsecured creditors would be worse off than in Chapter 7, so it fails the "In the best interest of the creditors" test.

If they deny the debt deduction I would have disposable income to pay the Trustee of approximately $3,500 a month. However, I would still have the residence, which would immediately head into foreclosure. Since I am upside in the value of the house this in essence would punish the secured creditor and allow the unsecured creditors preferrential treatment by receiving my monthly payments. This goes against the concept of preferential treatment to the secured creditors over the unsecured creditors.

In conclusion denying my claim of secured debt on the Chapter 7 "Means Test" would seem to be an indefensible position for the Trustee. It further points to the fact that the allowance for secured debt deductions is there specifically for the benefit of the "Secured Creditors," because if you took it out "Unsecured Creditors" would get paid in Chapter 13, and "Secured Creditors" would eventually be left trying to sell property.

Feel free to comment on my logic.

[SinkingFast]

They did set up an order of succession, as it were, for Creditors.

In a Ch 13, 2 people are paid regardless. The Trustee get's their take every month. The first few payments of the Ch 13 plan go right into your attny's pocket. Attnys who file Ch 13 are paid the remainder of their retainer out of plan payments before any Creditors ever see a penny in payment.

Priority Creditors are at the top of the list after the attny is paid. The IRS, Child Support Payments, Alimony, etc.

Secured Debt is 2nd. Secured is to be paid after Priority and before Unsecured. That is true.

Unsecured Creditors are on the bottom rung of the ladder and will receive the smallest amount. Not only in dollars, but in % as well. What ever dollars are left after the Priority and Secured Creditors have been paid is split amongst the Unsecureds. If you have 10 hands out and $100 left, each Unsecured only gets $10/month.

[djk]

Concern: Can the trustee remove my secured debt deduction and force me into Chapter 13.

Lets assume the trustee can do just that. They remove my secured debt deduction from my Means Test, and now I am forced to convert to chapter 13.

In Chapter 13 the secured debt deductions comes back again. The language is the same. The trustee has to either deny it or accept it when calculating disposable income.

If they accept it, I have negative disposable income and therefore no payment in Chapter 13. In that case the unsecured creditors would be worse off than in Chapter 7, so it fails the "In the best interest of the creditors" test.

If they deny the debt deduction I would have disposable income to pay the Trustee of approximately $3,500 a month. However, I would still have the residence, which would immediately head into foreclosure. Since I am upside in the value of the house this in essence would punish the secured creditor and allow the unsecured creditors preferrential treatment by receiving my monthly payments. This goes against the concept of preferential treatment to the secured creditors over the unsecured creditors.

In conclusion denying my claim of secured debt on the Chapter 7 "Means Test" would seem to be an indefensible position for the Trustee. It further points to the fact that the allowance for secured debt deductions is there specifically for the benefit of the "Secured Creditors," because if you took it out "Unsecured Creditors" would get paid in Chapter 13, and "Secured Creditors" would eventually be left trying to sell property.

Feel free to comment on my logic.

my opinion is you are argueing points of law. the code is law, yet is open to interpretation by you, any attorney, the trustee, and the judge. my opinion is your case could become a can of worms. your logic is to save your ass with
the least amount of hardship to yourself, it's understandable..but possibly not what the lawmakers had in mind when formulating the current code. In fact, in my opinion, your case seems to be one of those that could possibly be in the extreme fringes of a actual C13 being contorted to fit into a C7. Hey!, good luck and more power to you but in my opinion yur attempt is outside of the "spirit" of the law when it comes to a C7. anyway, you asked.