can i file chapter 13 if im below the median and do a lien stripp?

[brokehmowner]

I was considering a 13 in order to get a lien strip. My attorney told me that even if you can only pay the trustee, you can still get a 13 for 3 three years. And if you have trouble you can revert to a chapter 7 if you have to.

In the end after both my DH and I got raises, we ended up being $1,100 over the median, which meant we could NOT get a 3-year plan. But we did end up qualifying for a 7 so we decided to do the 7 because we did NOT want to be under a 13 for 5 years with no room for emergencies, set backs, etc. We figured the 2nd would not bother us as long as we were under water, and once they started foreclosure noise we would start talking settlement, to hold them off, and then look for a rental in the meantime.

As it turned out the 2nd ended up extinguishing the loan completely in Nov 2013 under their HARP program so we were extra glad we didn't go chapter 13. They got $3k out of the deal from the government, which is about $3k more than they would have ever gotten from us.

[momofthree]

Yes, you can. I'm in CA and did the same thing. Our attorney told us going into it though that we had to show at least $200 disposable income in order to get approved for it though. We ended up just paying our car payment + attny fees + tt fees as our 13 payment. Only 8 months to go! Good luck!

[ValleYum]

Thanks for the info! It makes it easier for others to give advice when they know the numbers/details. I wish you good luck!

[messedup]

valleyyum, 1st loan bofa-460,000
current market value around 440,000
2nd loan have not payed in 6 years ocwen-140,000
a collect agency called-nationwide credit inc. is handling the 2nd now

[ValleYum]

What is the balance of your first mortgage?

[spidge]

Where can you cut expenses. Even though some things are allowed I found wiggle room.

A ch13 does not leave much room for life challenges as they come at you. Things like car and home repairs are not accounted for so you need to have your support ready to last the entire life of the ch13. It took us until the third year of the plan to feel like we were managing it better. If you are below the median you will likely have the option of a 3, 4, or 5 year plan. For instance our 3 year plan payment was apx $750 and I could not see us doing that so we asked for the 5 year payment plan to make it more manageable.

[LadyInTheRed]

ok i talk to a attorney last week and we did a rough estimate on the means test and came out 98 dollars disposable income. he says to find some other source of income even if i have to make it up some how. im ok with that but does that sound right coming from a attorney? i guess what he is saying is just lie about it so we can have a plan payment. any insight on this anybody?

I wouldn't lie. It may help you get a plan confirmed, but it won't help you get through a Chap 13. You need to figure out how to earn more income. Flip burgers, babysit, mow lawns - whatever you can do to earn what you need to fund a Chap 13 plan. If you can't do that, than you might as well file a Chap 7 and be done with it. Once the mortgage is discharged, you may have better luck getting a settlement. But, you also may have to face the fact that you can't afford to keep your home.

[spidge]

In order to strip the 2nd in a 13 your balance on the 1st must exceed the value of the house leaving no collateral for the 2nd to collect on.

[messedup]

btw, he wants me to get a home appraisal i think the home will appraise for 440,000 because thats what the comps are around my neighborhood for the same house with same bedrooms and square footage,we owe 460,000 so thats 20,000 underwater for the second mortgage.do u think the court will approve the lien strip or is that to close for it? im in Ca.

[messedup]

ok i talk to a attorney last week and we did a rough estimate on the means test and came out 98 dollars disposable income. he says to find some other source of income even if i have to make it up some how. im ok with that but does that sound right coming from a attorney? i guess what he is saying is just lie about it so we can have a plan payment. any insight on this anybody?

[LadyInTheRed]

i guess ill have to run the numbers with my attorney and see what the outcome is,then go from there,btw if my mother in law pays 500 a month for renting one of my rooms can i use that as income?

You must include that as income.

[spidge]

To add to LITR's comments, I was surprised how high the federal allowances were. We ended up better off under the 13 guidelines than attempting to pay all the debt payments.

[messedup]

i guess ill have to run the numbers with my attorney and see what the outcome is,then go from there,btw if my mother in law pays 500 a month for renting one of my rooms can i use that as income?

[LadyInTheRed]

so if i have no disposable income to pay to trustee then how does that work?

You must increase your income and/or reduce your expenses to show you have enough disposable income to afford a plan payment high enough to pay the trustee fees and any other amounts that must be paid through the plan. That makes an under-the-median Chap 13 an especially difficult Chap 13. But, spidge is evidence that it can be done. Don't think you can just reduce your expenses to some impossible amount and get your plan confirmed. A plan with expenses that are too low will be considered not feasible or not proposed in good faith.

[messedup]

spidge, i have a feeling thats why they wont settle for less than 80%. so if i have no disposable income to pay to trustee then how does that work?
btw, ill talk to a few lawyer this week and ask.