High mortgage payment.

[inhocknow]

Hello folks.

Heres a question for you experts.

If my mortgage payment is $2000 per month including taxes, principal and interest and my total income with my and my spouse is $3000, can the trustee object to me re-affirming my house on the grounds that the payment is too much for me to afford? I was never late on my mortgage.

Will the trustee consider the entire $2,000 mortgage payment when he or she tries to figure out if there is any money for me to pay back?

Thanks for your help.

I am filing for Chap 7.

[KellyBerg]

How do you afford a 2K payment on a 3K monthly income with your electric, gas, phone, etc bills?

[inhocknow]

Thanks for your quick reponse.
Its rough but we make it. I'm just asking how the trustee looks at this?
Thank you for all of your help!

[Boscoe]

Talk to a couple of attorneys on this.....that is a 66% debt to income ratio, without, as the previous post says, taking into account utilities, maintenance, commuting fees, food, clothing, medical, etc, etc.

My gut reaction is that you will need to sell this one to the trustee.........and maybe even to your attorney to start with.

[inhocknow]

Talk to a couple of attorneys on this.....that is a 66% debt to income ratio, without, as the previous post says, taking into account utilities, maintenance, commuting fees, food, clothing, medical, etc, etc.

My gut reaction is that you will need to sell this one to the trustee.........and maybe even to your attorney to start with.

Thanks for the quick response. This is my primary residence. I probably have negative equity in my house as I bought it 2 yrs ago and now the market took a dump.
Thanks for your help.

[keepmine]

Thanks for the quick response. This is my primary residence. I probably have negative equity in my house as I bought it 2 yrs ago and now the market took a dump.
Thanks for your help.

If you have negative equity, why on earth would you want to reaffirm the home?

[HHM]

You need to look at the allowed housing expense for your area. That will give you some idea of how reasonable your payment is.

Regardless of anything else, from a purely financial/practical aspect, you should NOT keep this house. You need to break the emotional attachment and look at this objectively. The payment is 66% of your take home pay (I am assuming the $3000 is net pay, not gross) and you have negative equity. The payment is killing you financially and you are not getting ANY return on investment. Moreover, your income is relatively low, so the income tax right off of the mortgage interest is probably not worth it (vis a vis, going to find a cheaper place to live).

When you say you have been getting by...do you mean you have been covering your living expenses with credit cards?

Frankly, it is too much house for you to afford and there is NO financial reason to keep the house. Dump it.

[inhocknow]

Thanks for your advice.
Would the trustee allow me to reaffirm it though?
Thank you again.

[lrprn]

Thanks for your advice.
Would the trustee allow me to reaffirm it though?
Thank you again.

If you file without a lawyer, then the bankruptcy court judge, not your trustee, has to approve the reaffirmation agreement. You'll have a hearing in court. Frankly I can't believe any judge is going to approve this reaffirmation agreement when it takes 66% of your income to pay the mortgage. (And please tell me the mortgage(s) aren't an ARM loan!!)

If you file with a lawyer, then your lawyer has to sign the reaffirmation agreement agreeing that he/she certifies that the agreement represents a fully informed and voluntary agreement by you, the agreement does not impose an undue hardship on you or any of your dependents; and that the lawyer has fully advised you of the legal effect and consequences of the reaffirmation agreement and any default under the agreement.

Given how much a debt load this is for you and your family, I'll be surprised if any competent Ch 7 or Ch 13 lawyer will sign the reaffirmation agreement for you either.

Stranger things have happened though.

I wish you luck - you are going to need it in spades if you manage to get a reaffirmation agreement signed for this financial sinkhole. Far better in your circumstance to leave your mortgage(s) unaffirmed. Then if you can't make the payments on time in the future, at least you can still walk away from the balance owing nothing.

[inhocknow]

Thanks for your help.

The house is only at about 5,000 in negative equity. It used to have about 30k in equity before the market dropped. Its not a lot of negative equity though as its only at -5000 right now. I do have a lawyer also. Thanks for your help.

[HHM]

Thanks for your help.

The house is only at about 5,000 in negative equity. It used to have about 30k in equity before the market dropped. Its not a lot of negative equity though as its only at -5000 right now. I do have a lawyer also. Thanks for your help.

Wow, I am always amazed at how resilient people can be about making "excuses" so they don't have to face facts.

But, here is some advice vis-a-vis BK, so long as you are current on your mortgage payments, you may not have to sign a reaffirmation agreement. Most mortgage companies will not force the issue of reaffirmation, and so long as you keep making payments on time and for the proper amount, no reaffirmation is necessary. (note, a strict reading of the BK law seems to require a debtor to either reaffirm, redeem, or surrender secured loans, but most lenders are allowing, so called, ride throughs).

The problem you may run into is if the $2,000 monthly payment may exceed the allowed housing expense for your district. If that happens, the excess may be counted as disposible income, or you will have to account for the money with other expenses.

From a BK perspective and from a practical perspective, keeping the house is probably unrealistic.

[inhocknow]

Thanks for your help.
I'm sure it is over the allowed mortgage expense in my region.
My neighbors house sold about 5 weeks ago and we have identical houses and it sold for $5000 less then what I owe on my mortgage.
Thanks for all of your help and insight.

[JRScott]

It is unlikely any lawyer or judge worth their salt would approve such a reaffirmation. You might can get by without reaffirming as HHM suggests.

I to though as others did would give a long and hard thought to keeping the home. 66% of your income is just to large a chunk going to housing in my opinion. Normal is from 25%-35%.

I wish you good luck no matter what course you choose.

[Lindsay]

This must be a big house! Is it a subprime mortgage that the payment is this high? I would probably just give it up if I were you, unless you think that you'll suddenly increase your income after filing. It's way too much money and you'll be in financial trouble again and waste your fresh start.

[spell]

So.... answer this.

A typical guideline for housing expenses is 25% of income or $750.
You've been overspending this guideline to the tune of $1250 per month.
Bought 2 years ago totals to about $60,000.

How much unsecured debt do you have? My guess is it's considerably less than $60,000. Unless something major changes, you'll be in debt up to your eyeballs again in two more years for this same reason.

Don't reaffirm. That house is the cause of your current situation.