Reaffirm Mortgage for Means test purposes.

[Gabe]

My lawyer suggested when I file for Chapter 7 we will act like we wish to reaffirm my very large mortgage payment so I can pass the means test. (Even though I want to walk away from the house)

Does this sound like a good plan?

Do you see any downsides to it?

Thanks

[lrprn]

Why does your lawyer want you to tell your mortgage lender you are going to reaffirm, but then not reaffirm?

Whether you reaffirm your mortgage or not has no effect on the Means Test expense and asset figures for your home. They will be the same regardless.

Is your lawyer trying to avoid an objection or a faster foreclosure by your mortgage company?

[Gabe]

He said he has heard of a case or two where the trustee objects when the person says they are going to surrender their home because of all the disposable income that would create. (As in they don't want to count the mortgage amount towards the means test)


Hopefully it is a rare occurrence.

[Scooter10]

I am being advised to do the same thing.

Without this exspense I would have a large amount of dispoable income.

I do not undersand the previous comment "Whether you reaffirm your mortgage or not has no effect on the Means Test expense and asset figures for your home. They will be the same regardless."

I may be dense, but could I get a better explaination?

Thank You.

[lrprn]

I do not undersand the previous comment "Whether you reaffirm your mortgage or not has no effect on the Means Test expense and asset figures for your home. They will be the same regardless."

I may be dense, but could I get a better explaination?

Let's say that your monthly mortgage payment for your home is $1,000/month.

You list the difference between what is allowed on the IRS allowance for housing and your $1,000 monthly payment you pay to the mortgage lender for the secured home loan on your Means Test (lines 42 and 43) http://www.uscourts.gov/rules/BK_For...m_22A_1006.pdf and the $1,000 payment on Schedule J (number 1) - http://www.uscourts.gov/rules/BK_For...rm_6J_1207.pdf

Whether you reaffirm this mortgage loan or not, you still get to list the $1,000 monthly payment on your Means Test and Schedule J.

The only thing reaffirming this secured loan does after your bankruptcy is closed is make you responsible for paying any shortfall paying off the loan in full when you sell the house or if you fall behind on your mortgage payments and your house is foreclosed on, you still owe whatever is left on the loan at foreclosure. That's it.