housing expense question

[Richie00]

question....
if you are filing 7 and putting your house into bk how do they caculate what your housing expense would be since you havent moved yet. We arent keeping the house and our lawyer said we cant use our mortgage as a monthly expense since we dont plan on keeping the house and are behind. Any experience on this issue? She said she would need atleast a rough draft of a lease so she would know what amount to list.

[debee]

There's a local standard housing expense for your zipcode & household size. You can get it from NOLO's online Means Test. You can use that on the Means Test. Once you have a signed lease or rental agreement, you can use that amount. I think some people have used the standard on their schedule J as well, but that probably varies by trustee/district.

Another option would be to pretend that you plan to stay in order use the mortgage expense and live rent-free. You don't have to reaffirm to appear as if you intend to stay. You could make a token payment or two. Perhaps apply for a mod. Then you get to use the expense and drag out the foreclosure. You can tell your lawyer you plan to stay but you want the option to walk away down the road.

[Richie00]

thanks for the info! My lawyer told us that we have to be current on mortgage when filing if we plan on staying in house. We are behind and werent planning on trying to catch up since its really a high amount for the size of the house. So can you file 7 and be behind in the mortgage and still act like you want to stay?

[debee]

Yes, some people here have done it. They made a payment or two before filing, so if any questions were asked they could say they intended to catch up. People have also been in the midst of a loan mod (behind, etc) and gotten through just fine.

If I were you I would be calling some other attorneys as if I was contemplating bk and not sure whether I could keep my house because I was behind, trying to get a mod, etc. I would ask them whether it's possible.

If they say "It's up to the lender" and then tell stories about other clients who have kept their houses even though behind, then you know it's possible and that your lawyer is lacking in... something.

[debee]

My lawyer told us that we have to be current on mortgage when filing if we plan on staying in house.

I had a second thought and so have to post again:

Your lawyer may have meant that if you really want to KEEP the house you need to be current because if you are in default your lender can move to lift the stay and foreclose. That's one possible meaning.

A second possible meaning, and the interpretation that I came to when I first read your post, is that you would meet with trustee objections if you tried to claim the expense while behind.

I would clarify your attorney's meaning along with the possibilities in your district before deciding how to proceed.

[jetsfan2010]

Just was reading over this and had a ques to piggyback the original poster


If you are renting currently, can you use the rent from the signed lease as the amount listed for this expense? I was under impression you could not in a 7.

[debee]

If you are renting currently, can you use the rent from the signed lease as the amount listed for this expense? I was under impression you could not in a 7.

I'm not sure I understand. Do you mean can you exceed the standard on the Means Test with a rental amount? No, you get up to the standard on rent. If it's a secured debt you get to list the entire payment (on line 42a).

Or, do you mean can you use the amount from your lease even if your actual rent is different? You would use your actual rent.

Or, do you mean if you are planning to move can you use an upcoming rent amount? I don't think you can. OP's case involves surrendering a secured debt. When someone is surrendering a house they are moving from a situation of higher expense to lower. In some districts the UST has objected to people claiming a higher housing expense for a house they were surrendering when they would fail the Means Test without it. It sounded like OP could be in such a district since instead of using his mortgage amount on the petition, his attorney is asking for lease info. Perhaps I caused some confusion in my first post when I said, "Once you have a signed lease or rental agreement, you can use that amount..." To be more clear I should have added the phrase, "... on schedule J."

[HomeNow2]

Question from Illinois.....when the Chapter 7 is done and you included your primary home in it as 'other' asking for a mod (we were current when we went into the Ch7, missed 1 payment before discharge, discharge happened and now have missed another payment), the bank sends the Notice of Default with the acceleration payment letter, now we are 2 months behind, should we start asking for a mod directly from the bank or will the foreclosure simply start and we ask in front of the judge when we show up at court???? Trying to stay as long as possible...................

One more thing, since I had lost my job in 2009, can I simply write the bank and ask for Obama's Forbearance of 4-6 months of no payment? My spouse is working but there isn't any extra $ to pay on the house right now until I obtain full time employment again.

Thanks for the insight!

[Richie00]

thanks for all the info. It is all very confusing to me since I am new to this but learning. We are filing a 7 and my lawyer is going to use our new rental amount for the "housing expense." Our lease will be starting right around the time we end up having our 341. Our rental amount will infact be less than our mortgage however we were really in the negative each month so hopefully it will still be okay with the lesser expense. Our lawyer says that the court knows we will be moving and will want to know the new amount. However we have to use any deposits as assests.

[StrawberrySu]

I'm not sure I understand. Do you mean can you exceed the standard on the Means Test with a rental amount? No, you get up to the standard on rent. If it's a secured debt you get to list the entire payment (on line 42a).

Or, do you mean can you use the amount from your lease even if your actual rent is different? You would use your actual rent.

Or, do you mean if you are planning to move can you use an upcoming rent amount? I don't think you can. OP's case involves surrendering a secured debt. When someone is surrendering a house they are moving from a situation of higher expense to lower. In some districts the UST has objected to people claiming a higher housing expense for a house they were surrendering when they would fail the Means Test without it. It sounded like OP could be in such a district since instead of using his mortgage amount on the petition, his attorney is asking for lease info. Perhaps I caused some confusion in my first post when I said, "Once you have a signed lease or rental agreement, you can use that amount..." To be more clear I should have added the phrase, "... on schedule J."

Debee, are you saying if your rent exceeds the standards, you can't use the excess on the means test, but you can use it on your means test? I am desperately trying to find something to rent in Charlotte that will work with our dinged (okay, nuked) credit, and it seems the less expensive the rent, the less likely they are to accept us. The larger homes seem to stay on the market alot longer, and they seem more amenable. The standard for rent is $1177, and I am looking at $1200 to $1300. I checked with the attys office I am going to used, and they said that would be okay.

[jetsfan2010]

The standard rent here is right in line with what I pay but I actually was looking at the alloted expense for a car. If I plan on surrendering a car(with a payment that is identical to the allowed amount if you own 1 car), and I wind up financing a new car(lower payment) can I claim both on the means test, or just the one I intend to keep.

Also, the one that has the higher payment could possibly be reaffirmed and the value "crammed down" via the 910 day rule. Does that cram down make the payment lower?

[debee]

Debee, are you saying if your rent exceeds the standards, you can't use the excess on the means test, but you can use it on your means test? I am desperately trying to find something to rent in Charlotte that will work with our dinged (okay, nuked) credit, and it seems the less expensive the rent, the less likely they are to accept us. The larger homes seem to stay on the market alot longer, and they seem more amenable. The standard for rent is $1177, and I am looking at $1200 to $1300. I checked with the attys office I am going to used, and they said that would be okay.

@ StrawSu -- If you need to exceed the standard in order to pass the Means Test, then you open yourself up to a UST objection. Doesn't mean you will get one, just that the risk increases.

If you can pass the Means Test without exceeding the standard, then it's a non-issue. Whether the UST will object depends on the particulars of your case. Your attorney ought to know whether there is any risk and the extent should be communicated to you before you file.

@ jetsfan - I haven't researched 13 stuff. I would post that Q in the chapter 13 section so the 13'ers will read/respond.

@Richie - It sounds like your lawyer has it covered. I wouldn't worry.

@HomeNow2 - I think your post is buried in this thread. You should start a new thread. I believe with mods you go to the bank. Don't wait until you're in court. Again, I would start a new thread to get the attention of Mod folks and people who know the ropes of stalling foreclosure. Good luck.

[StrawberrySu]

Debee, I don't need the rent to pass the means test, since the attorney said my two rentals and home mortgage in OH put me way negative on the means test. In fact there is no allowance given in the test, because my mortgage cost is $3191. And the attorneys said I would have difficulty passing means IF any of the properties were foreclosed on before I filed, so they definitely count the mortgage in this district, even if you are surrendering. I just don't want an objection on the Schedule J amount, since it will be over the standard.

And my apologies to Richie00 for hijacking the thread, but I thought this was a question many could benefit from Debee's wisdom on.

[debee]

I just don't want an objection on the Schedule J amount, since it will be over the standard.

The UST would only object if he can cobble together enough $ (from all your expenses) to fund a ch13. You can prevent this by making sure that your other expenses are unassailable, and/or if you have expenses that may be allowed in a 13 but not in a 7, such as 401K loan repayment.

I'll be in Charlotte next week. Will wave when flying into CLT.