Have to do a 13 - how does surrendered house figure into plan payments?

[blucat13]

My attorney has reviewed all the means test numbers, and is pretty sure I am going to get forced into Ch 13 because I am over the median income, and I have $$ left over at the end of the day for a payment plan.

What I wonder is, I am surrendering my house as part of this. How in the world do they calculate a payment plan if you are surrendering a house? There is no equity in the house, I am upside down by about $10K, and that is IF the house even sold. Nothing in my area is selling right now, no matter how cheap. So, they would have no idea how much a short would be, if I filed for Ch 13 right now. I am current on all my payments, house, car, and cc.

I plan to keep my car, as I can afford the payment, and I have about $12K of credit card debt.

So, anyone know how they account for a house you are surrendering?

T.

[laurannm]

It may vary from district to district but I think they will plug in as a housing expense whatever the IRS guidelines are for rent in your area. I am sure someone with a little more knowledge will chime in though....

[blucat13]

I'm a little confused.... they look at what you make, and what you have leftover after allowable expenses and base your payment plan on that, right?

So, I guess it doesn't really matter HOW much you actually owe, it is what you have leftover each month after allowable expenses? So, whether the mortgage company comes after you for a $30K deficiency or a $5K deficiency, if the Trustee says you have $300 a month available for a payment plan, that's all you pay?

I guess I initially thought your payment was based on what you owed, and if you didn't KNOW how much short you would be on the house after a foreclosure, they couldn't calculate your monthly plan payment.

So, the house I am surrendering doesn't really matter as far as the amount I pay every month in Ch 13?

[southerncomfort]

I'm a little confused.... they look at what you make, and what you have leftover after allowable expenses and base your payment plan on that, right?

So, I guess it doesn't really matter HOW much you actually owe, it is what you have leftover each month after allowable expenses? So, whether the mortgage company comes after you for a $30K deficiency or a $5K deficiency, if the Trustee says you have $300 a month available for a payment plan, that's all you pay?

I guess I initially thought your payment was based on what you owed, and if you didn't KNOW how much short you would be on the house after a foreclosure, they couldn't calculate your monthly plan payment.

So, the house I am surrendering doesn't really matter as far as the amount I pay every month in Ch 13?

I would say that is correct. If you were keeping the house, then the mortgage payment would be one of your expenses. But, if you are surrending it, then I assume the trustee will allow housing expenses based on what the PP said--the average rental amount in your or whatever your rent expenses turn out to be.

So you want to keep the house?

[blucat13]

No, I want to surrender the house.

The problem is, the main issue IS the house. If I didn't have the house payment, I could afford to pay off my credit cards in a couple of years on my own, much less time than the CH 13 would force me into. With my income and level of debt, they will force me into a 5-year 100% repayment. I could pay that off myself, and not be adding another couple of thousand in lawyers fees on top of it, IF I could get rid of my house. Problem is that I can't sell it for what I owe.

I have been reading some horror stories online about how hard the short sale process is with Countrywide, and how it can take six months to a year even if you have an offer. A lot of buyers aren't willing to wait, so you could lose whatever offers you DO get and have to start over again, stretching the process and still having to make payments the whole time so your credit doesn't get trashed. Seems like a losing proposition.

So, what happens if you have no debt EXCEPT your house, and it goes into foreclosure? Can you declare bankruptcy to save yourself from getting sued, if the house was your only debt? How does that work? Because what I am wondering is if it takes a year for them to finish foreclosing and sue me, if I put some of my extra house payment toward the other debt, by the time they got around to suing me, I might have the other debt mostly paid off.

Any thoughts?

[Hobbles]

If the house is the issue then there are other options besides BK. Talk to a financial advisor to find out what the laws and repercussions are in your state (tax, deficiency judgment, etc) for going into foreclosure to see if that wouldn't be a better option for you.

[SiftedLikeWheat]

If the house is your only problem, I would get on the phone with the lender right away and see if they will refinance or offer forbearance/deferment. You need to look at some of the sites offering help to those trying to avoid foreclosure. Right now Paulson is talking about offering more programs to stop foreclosure. You might try HOPE NOW or one of those. IT IS NOT EASY. You may still want an attorney to help you negotiate. It used to be that the lenders wouldn't talk to you until you were already three months behind on your payment. But if you insist that you will foreclose and file BK if they do not work with you, maybe you can get somewhere and avoid BK. It's certainly worth a try.