Is my atty just wrong?

[SubPrimeME]

I am pursuing a chp 7 - no asset case

I am above the minimum income - I did the Means test, and failed-this is with the house and the 2nd.(both of which will be surrendered)

I am moving into a new home- we are doing a contract to deed. The payment will be similar HOWEVER, we are technically 'renting.'

So with that said, my attorney says it will be no big deal- that we can use the rent amount to show a negative income, however my gut is telling me that we are 'renting' and that there is a cap on what we can claim on the Means test with the rent.

I haven't done the I/J- so I am not sure what that will be(I imagine that will help me)

My question is- is my atty wrong to assume that we can use a simliar 'rent' amount??? Isn't there a cap? My home is in MN

Thanks!

[ameliabedilia]

Have you checked the standard amounts for your area on the IRS website? We had rent that was $200 more than the standards, but we put the actual payment as we were in an expensive area of the county. I think I was told it just had to be "reasonable". I don't think it matters whether you are renting or making mortgage payments.

[SubPrimeME]

Have you checked the standard amounts for your area on the IRS website? We had rent that was $200 more than the standards, but we put the actual payment as we were in an expensive area of the county. I think I was told it just had to be "reasonable". I don't think it matters whether you are renting or making mortgage payments.

I have, and I using the full amount, however, I have read on other posts that there is a cap. is the cap the same thing as "reasonable"?

SO I am using $1097.00- for family of three and my rent is 2350.00 so is this reasonable? thanks!

[tallberry]

Hmmm, I thought if it is rent, you must use the IRS allowable amount but if it is a mortgage you can use that amount as long as it is "reasonable"?

[Dollar Bill]

Maybe you should explain the whole "contract to deed" situation to your atty in more detail.

Are the property taxes in your name?
Does an escrow company take care of the payments and keep a amortization schedule?
What are the terms of the contract?

These might be important in determining whether you can claim this as a mortgage instead of rent.

I hope it works out.

[SubPrimeME]

I spoke to another atty at the firm and explained them the contract to deed, and I am allowed to cliam that as a mortgage payment. Interesting the level of knowledge within a firm, it's almost like a call center, if you don't like answer call back for another atty!

Thanks everyone for their input!

[Minnymouth]

As long as the "contract to deed" or often called "land contract" is a written contract recorded at the Courthouse, it is as legal and binding as any mortgage contract. The only difference is a private individual holds the contract.

My home was purchased back this way from the buyer that bought it at auction. I paid on it for one year, refinanced it with a mortgage company, and got a better interest rate and got it put back on a regular mortgage. During this time on the "contract to deed", I paid all property taxes, insurances, upkeep and thus was able to claim all of it on my taxes at the end of the year.

When I went to finance it with a mortgage company they treated it like a refinance NOT a new purchase, because I had the contract recorded. Thus I did not have to make a "downpayment" when I financed it with the mortgage company.

Check your contracts closely to make sure that you are paying these, if so you can claim them.

If you do not have the proper paperwork really all your doing is renting with the option to buy in the future. Anything "verbal" is not valid.

And recording it at the Courthouse is very important.

So check that paperwork, folks!

[Bandit]

Interesting the level of knowledge within a firm, it's almost like a call center, if you don't like answer call back for another atty!

I have what I call project days, going through the phone book just calling attorneys & repeating the same questions just to see what they will say. Truly amazing what they say & how they stutter around not knowing anything. Some do know & some don't know anything.
I do wonder that half of them passed law school with a D- & their heads up their butts.

[Cali]

The amount allowed for my area is 1843$(or something close to that) and there is no way you can find a 3 bedroom here for that amount. So my rent is way over that. And everyone I have talked to said it wouldn't be a problem.

[SubPrimeME]

As long as the "contract to deed" or often called "land contract" is a written contract recorded at the Courthouse, it is as legal and binding as any mortgage contract. The only difference is a private individual holds the contract.

My home was purchased back this way from the buyer that bought it at auction. I paid on it for one year, refinanced it with a mortgage company, and got a better interest rate and got it put back on a regular mortgage. During this time on the "contract to deed", I paid all property taxes, insurances, upkeep and thus was able to claim all of it on my taxes at the end of the year.

When I went to finance it with a mortgage company they treated it like a refinance NOT a new purchase, because I had the contract recorded. Thus I did not have to make a "downpayment" when I financed it with the mortgage company.

Check your contracts closely to make sure that you are paying these, if so you can claim them.

If you do not have the proper paperwork really all your doing is renting with the option to buy in the future. Anything "verbal" is not valid.

And recording it at the Courthouse is very important.

So check that paperwork, folks!

OK, so now I'm wondering how it will work, as my Father-in-Law is is actually buying the home for us, but we are buying it from him in a few years, so we need to make sure that we have the abilitiy to do this. Am I correct to think that we indeed can do this?

Thanks so much!

[SubPrimeME]

I have what I call project days, going through the phone book just calling attorneys & repeating the same questions just to see what they will say. Truly amazing what they say & how they stutter around not knowing anything. Some do know & some don't know anything.
I do wonder that half of them passed law school with a D- & their heads up their butts.

It's truly sad, and I wish there was a better way to track people's experience with atty's... Hey now there an idea! I'm sure there are small databases out there, but nothing formal. HMMM.

It's amazing this whole experience, from trying to get a straight answer from Countrywide, to atty's not knowing basics of a BK, to how the new law was written. It really seems to me that we are living in a world were those few individuals whom can't follow the rules, have really messed it up for the rest of us.

I do understand I took a mortgage out that wasn't in my best interest- option loan- but I was on the same band wagon as everyone else... just sucks, this whole situation. sorry for venting.

[Minnymouth]

Okay, now you say "actually" that it is your Father-in-Law that is buying the house right now and you will purchase it from him in the the future..............CORRECT??
So basically, right now you are renting from your Father-in-law....
Does he have it on a "contract to deed" or is he buying it through a mortgage company? Is the Father-in-law maintaining the property, paying the taxes, insurance etc?? If so, then HE gets to claim all these on his taxes.........

When you go to purchase the home in the future if your father-in-law owns the home you can buy it from him thru a mortgage company UNLESS he has a "contract of deed" with a private individual - THEN you have to deal with the private individual to OKAY THE SALE...

I am understanding this right..... your father-in-law holds the paperwork on the home now??? And is it a "contract deed" with a private individual instead of a mortgage company.?

And regarding your bankruptcy, you are a rentor only...... not a property owner.

You shouldn't have any trouble getting financing after 2 years out of bankruptcy... I didn't and most don't have any trouble and get good interest rates also.

[SubPrimeME]

Okay, now you say "actually" that it is your Father-in-Law that is buying the house right now and you will purchase it from him in the the future..............CORRECT??
So basically, right now you are renting from your Father-in-law....
Does he have it on a "contract to deed" or is he buying it through a mortgage company? Is the Father-in-law maintaining the property, paying the taxes, insurance etc?? If so, then HE gets to claim all these on his taxes.........

When you go to purchase the home in the future if your father-in-law owns the home you can buy it from him thru a mortgage company UNLESS he has a "contract of deed" with a private individual - THEN you have to deal with the private individual to OKAY THE SALE...

I am understanding this right..... your father-in-law holds the paperwork on the home now??? And is it a "contract deed" with a private individual instead of a mortgage company.?

And regarding your bankruptcy, you are a rentor only...... not a property owner.

You shouldn't have any trouble getting financing after 2 years out of bankruptcy... I didn't and most don't have any trouble and get good interest rates also.

My Father-In-Law is purchasing the home, he closes at the end of March. He in turn will be selling us the home in the future. SO, are we able to do a 'contract to deed' now, or are we only renters. My fear is what we can claim for deductions on the Means test. As it stands now we qualify for a 7 based on deductions, but when we move - even though we are paying the same amount in rent- can we claim that on the Means test? Or is that the infamous I&J- admitially I have not done this portion- that I can claim the entire rent amount?

In other words, can I attempt a contract to deed, and if NOT can we show the entire 'rent' amount on the Schedule? Guess I am a bit lost....

SO no- my Father-In-Law is purchasing the home thru normal means- via Countrywide.

[SubPrimeME]

OK, I think I get it now, Google is my buddy these days. Essentially once my Father-In-Law purchases the home we can then turn around and do the contract for deed- what's really nice is we can set the contract at any price - meaning we can show no discretionary income on my part. It's all totally legal- as we want to make sure we don't do anything that is seen as fraud. I think we are a unique spot as we can work with the person who is providing the eventual deed.

[SubPrimeME]

As long as the "contract to deed" or often called "land contract" is a written contract recorded at the Courthouse, it is as legal and binding as any mortgage contract. The only difference is a private individual holds the contract.

My home was purchased back this way from the buyer that bought it at auction. I paid on it for one year, refinanced it with a mortgage company, and got a better interest rate and got it put back on a regular mortgage. During this time on the "contract to deed", I paid all property taxes, insurances, upkeep and thus was able to claim all of it on my taxes at the end of the year.

When I went to finance it with a mortgage company they treated it like a refinance NOT a new purchase, because I had the contract recorded. Thus I did not have to make a "downpayment" when I financed it with the mortgage company.

Check your contracts closely to make sure that you are paying these, if so you can claim them.

If you do not have the proper paperwork really all your doing is renting with the option to buy in the future. Anything "verbal" is not valid.

And recording it at the Courthouse is very important.

So check that paperwork, folks!

OK my question now is- Can My Father-In-Law carry a mortgage on the property while providing a Contract to Deed for me? I have heard conflicting things regarding this, that the lendor would not like it if a contract for deed was going on while there is a mortgage on the property... Also something about my Father-In-Law will need to ensure that he pays the taxes and insurance under his name?

Thanks!!!