putting it all out there. Here's our situation.

[mslaw]

Anything could happen. Read Alorth's story sometime. TT gave him a very hard time over his significantly above-the-IRS-list MORTGAGE. Rare but it can/does happen. Wanted him to short sale his house. Crazy stuff.
Do whatever it takes to get into the 7. Read the recent post of person who received 40K during his 13 from a case of injury and had to turn more than half over. Get it over with and then move on. You just don't have a good enough reason to be stuck in a 13 with all its inherent risks.

This is true. If we were trying to keep an asset of some sort, it would be worth it to do a 13 but we aren't. So it stinks to be in that place right between making slightly too much to do a 7 but not making enough to make it worth paying into a 13 (or even being able to with our disposable income).

Thanks guys!

[keepsmiling]

Anything could happen. Read Alorth's story sometime. TT gave him a very hard time over his significantly above-the-IRS-list MORTGAGE. Rare but it can/does happen. Wanted him to short sale his house. Crazy stuff.
Do whatever it takes to get into the 7. Read the recent post of person who received 40K during his 13 from a case of injury and had to turn more than half over. Get it over with and then move on. You just don't have a good enough reason to be stuck in a 13 with all its inherent risks.

[momofthree]

It may not be a problem, and an experienced attorney is a great resource for dictating how likely you are to get away with certain expenses in your particular district. That said, Olivies was dealing with the US trustee over the rent allowance issues. Since you are over median filers, there is a good chance that the US tt will get involved in your case as well. Your attorney may not be as well versed in what will fly with the US tt. I still suggest consulting with a few more attorneys as well. If they all tell you the same thing, then most likely you will be fine.

Again, we're just trying to provide information that you can use to make the decision that is best for your family--only you and your hubby can decide that.

[mslaw]

Ok I think I understand. So I'm just worried about what our lawyer is telling us and how differing it is from what I read here. She tells us that claiming a rent of 1500 a mo isn't a problem. But then I read here that because it is way above our county's IRS calculation for rent, that a trustee will have a problem with it. It's confusing.

[LadyInTheRed]

How do people surrendering their houses who have 3k a month payments use those as an expense for a ch7?

They bring the mortgage current before filing Chap 7, indicate on their statement of intentions that they will retain the house and pay on the mortgage and then keep the mortgage current durring the Chap 7. They stop paying on the mortgate and walk away after the BK is closed. In some districts, you may have to indicate on the statement of intentions that you intend to reafirm the mortgage. But, indicating an intent to reaffirm does not require that you actually reafirm.

[mslaw]

Ultimately, the decision is yours. I'm simply trying to let you know that there is an easier option for you, because, let's face it, a 7 is a much easier route than a 13. That said, a 13 isn't the end of the world. We're halfway through with ours and managing to survive.

I wasn't saying I wanted to do a 13. All I meant was the lady you posted, if I read correctly, didn't even have a mortgage any longer so she wasnt even filing on a mortgage. Obviously she couldn't claim it as an expense. How do people surrendering their houses who have 3k a month payments use those as an expense for a ch7?

[momofthree]

Ultimately, the decision is yours. I'm simply trying to let you know that there is an easier option for you, because, let's face it, a 7 is a much easier route than a 13. That said, a 13 isn't the end of the world. We're halfway through with ours and managing to survive.

[mslaw]

Ok I read the link. It seems part of the problem for her was she had sold her house 3 years prior and had already been renting.

[mslaw]

For our county it says we are allowed $911 for rent plus $600 for utilities.

[mslaw]

There's a lot more to our house issues. Such as possible mold. It isn't as simple unfortunately of just staying in it.

[momofthree]

As far as I know--someone correct me if I'm wrong--you only have to be current on your first mortgage when you file ch.7, not the 2nd. If you stop paying on your lease and all your debts, then you should have enough money to bring your first mortgage current before filing. Think of it this way: it will save you tens of thousands of dollars that you would have to pay into a ch.13 for 5 years. It is worth it. Plus, either way, you're gonna have to pay rent. If you are 4 months on your first mortgage, that is only around $3000 or so. 2 months of not paying on all of your debt (@ $1800/mo) will cover that without any problems. IMO, this is a much better option than 60 months of struggling. You do need to get an attorney who will fight for you to get a ch.7 though, so more consults are a MUST.

Here's what I suggest:
1. Stop paying on your debt.
2. Get caught up on your mortgage--should only take about 1.5 months.
3. Buy 2 new cars right before all the lates start showing up on your credit.

You should be good to go.

As always, consult with your attorney. I probably wouldn't go with the one you've already seen. Like I said earlier, find one that will fight for you.

And, honestly, your 2nd mortgage isn't going to foreclose when you are so far underwater. You may want to consider staying in your home for a few years, paying the $700/mo and saving as much cash as you can. THEN, stop paying and stay until you are foreclosed on, and move on if you are really unhappy in the home. I mean, realistically, you are probably not going to find a home you can rent for $700/mo with a family of your size.

[momofthree]

You may want to read Olivies story about the hell she went thru with the IRS rent allowance. It took her over a year of fighting the trustee and the courts, and she also had to struggle in a ch.13 for quite a while before she even attempted the fight for the ch.7 that she deserved. After reading, you'll understand why I suggest "keeping" the home so you can use the mortgage amount for your filing. She has quite a few threads on her ordeal, but this one explains how it all began...

http://www.bkforum.com/showthread.ph...rty-is-reached...

[SMinGA2]

But you will get to claim some amount for home rental - and how that is done will depend on the district. Your attorney is the best resource there. They may a) count your current #s for mortgage b) use an estimated rental expense assuming you've done legwork to know what to expect and can document that its a reasonable expectation or c) use county/state averages. I looked up KY's standards and for a family of 5+ the housing & utility #s range from about $1100/mo to $1800/mo. You can look to see where your actual county falls. If you happen to live in a county with a low #, you should probably talk to your attorney to find out what you need to do to have actual projections used. You are a larger family, but this category on the means test tops out at 5+. So perhaps a family of 5 in Cumberland County (example purposes only, I don't know where you live & don't need to) can do rent & utilities for $1103 per month. But a family of 7 might not be able to.

From the DOJ website:

Housing and utilities standards include mortgage or rent, property taxes, interest, insurance, maintenance, repairs, gas, electric, water, heating oil, garbage collection, residential telephone service, cell phone service, cable television, and internet service. The tables include five categories for one, two, three, four, and five or more persons in a household.

The taxpayer is allowed the standard amount, or the amount actually spent on housing and utilities, whichever is less. If the amount claimed is more than the total allowed by the housing and utilities standards, the taxpayer must provide documentation to substantiate those expenses are necessary living expenses.

The local standards include maintenance, repairs, cable, cell, etc. If your actual #s come up higher than the standards - or you think they will in a rental, make sure your attorney works with you so you can count realistic #s. Worst case scenario is you go into a ch. 13 based on housing of $X when your actual is higher.

[mslaw]

If you are surrendering the house within a ch.7 filing, then they can disallow the mortgage expense and instead use the IRS standard rent amount for your county and family size. In doing this, you would most likely be denied a ch.7 bk and have to convert to a ch.13.

If you claim that you are going to continue in the house, and "stay-and-pay" until your bk is closed, then you can walk away after that, free of liability. This way, you will qualify for the ch.7 bk discharge, and still get to surrender the house, just not immediately. Like a lot of bk law, it is ass-backwards, but it is what it is. You just have to play by their off-the-wall rules. ;)

I see. Our atty didn't mention not being able to use the house pmt as an expense. We are behind a few months on our payments so I don't think we can not include it in a ch7 right? Also would this be more like foreclosing on the house after the bk?

[momofthree]

If you are surrendering the house within a ch.7 filing, then they can disallow the mortgage expense and instead use the IRS standard rent amount for your county and family size. In doing this, you would most likely be denied a ch.7 bk and have to convert to a ch.13.

If you claim that you are going to continue in the house, and "stay-and-pay" until your bk is closed, then you can walk away after that, free of liability. This way, you will qualify for the ch.7 bk discharge, and still get to surrender the house, just not immediately. Like a lot of bk law, it is ass-backwards, but it is what it is. You just have to play by their off-the-wall rules. ;)