Trustee Not Including House Payment

[RickInMich]

First, he (the attorney) said that the US Trustee has informed him that they may start to make objections to including a house payment in the Chapter 7 if it's going to be surrendered.

Second, he said that my Disposable income would include the money freed up by surrendering the house.

Are both of these points correct?

Finally, He did mention that you have to state your intentions on what you would like to do with your secured debt at your meeting of creditors. He said you have 45 days after that to actually accomplish what you say you will do. He wasn't aware of the penalty, etc, if you decide to change your mind. Does this make sense?

I'm including a part of a post from another thread, but since this deals with Chapter 7, I wanted to ask a followup here. Has anyone else heard that they will not include the house payment when determining a Chapter 7? I mean, I suppose I can see the logic, but talk about forcing someone to make a decision! I was under the impression you didn't have to make the decision whether to surrender the house right away. Am I wrong about that?

Rick

[freshstart06]

I don't know but last week I read over a case in pacer where the case was dismissed because they surrender the house and they considered that additional income as disposable income. However, doesn't your new rent payments make up the difference??? I mean, if you give up your home, don't you have to find a place to rent and wouldn't that expense be included??? Make sure if you give up your home that you have a new expense to back it up or yes, that will be considered disposable income.

[JRScott]

Original Thread

If they did disallow the housing expense for a house you were going to surrender they would have to allow a reasonable rental expense as you will have to replace your living arrangement.

Now if you had a very large house payment and went to a cheaper rental arrangement that might indeed free up considerable income and that might be what the US Trustees are looking for.

Best bet might be to take your situation to 3-4 local bankruptcy attorneys and see what they say.

[lrprn]

I'm including a part of a post from another thread, but since this deals with Chapter 7, I wanted to ask a followup here. Has anyone else heard that they will not include the house payment when determining a Chapter 7?

There is case law from June 2006 in Georgia where the trustee was overruled by the bk court judge and the debtor was allowed to include both house and car payments on the Means Test even though they were both being surrendered - see http://www.thebklawyer.com/thebkblog...he-collateral/

I was under the impression you didn't have to make the decision whether to surrender the house right away. Am I wrong about that?

The current bk law states that the debtor's "Statement of Intention must be filed by the date of the 341 Meeting, or within 30 days after filing the petition, whichever occurs first. Within 45 days after filing the Statement of Intention, the debtor must actually implement the intent, by returning, redeeming, or reaffirming. These time periods can be extended by the court for cause." (from http://www.lawdog.com/bkrcy/bkcp7c.htm )

[jdenn47]

There is case law from June 2006 in Georgia where the trustee was overruled by the bk court judge and the debtor was allowed to include both house and car payments on the Means Test even though they were both being surrendered - see http://www.thebklawyer.com/thebkblog...he-collateral/

The current bk law states that the debtor's "Statement of Intention must be filed by the date of the 341 Meeting, or within 30 days after filing the petition, whichever occurs first. Within 45 days after filing the Statement of Intention, the debtor must actually implement the intent, by returning, redeeming, or reaffirming. These time periods can be extended by the court for cause." (from http://www.lawdog.com/bkrcy/bkcp7c.htm )

That's fine and all, but, what if you change your mind? The use of the word intention would seem to imply that you have that right. Is there a penalty, etc, for this?

[lrprn]

That's fine and all, but, what if you change your mind? The use of the word intention would seem to imply that you have that right. Is there a penalty, etc, for this?

No creditor can force you to sign a reaffirmation agreement. And no creditor can be forced to accept a reaffirmation agreement either.

If you do decide to reaffirm and sign the papers which your creditor then also signs and the signed form is returned to the court, then you can cancel your reaffirmation agreement at any time before the bankruptcy court enters a discharge order, or 60 days after your reaffirmation agreement is filed with the court, whichever occurs later.

To cancel your reaffirmation agreement, you or your lawyer must notify the creditor that your reaffirmation agreement is canceled. It's as simple as that.

[jdenn47]

No creditor can force you to sign a reaffirmation agreement. And no creditor can be forced to accept a reaffirmation agreement either.

If you do decide to reaffirm and sign the papers which your creditor then also signs and the signed form is returned to the court, then you can cancel your reaffirmation agreement at any time before the bankruptcy court enters a discharge order, or 60 days after your reaffirmation agreement is filed with the court, whichever occurs later.

To cancel your reaffirmation agreement, you or your lawyer must notify the creditor that your reaffirmation agreement is canceled. It's as simple as that.

So then, by that logic, wouldn't it make sense to just avoid this whole issue, at least plan on keeping the house, and then perhaps re-evaluate the situation at a later date? In order to do this, would you have to stay current on your house payments?

Thanks,
John