Reaffirming house for means test purposes per lawyer.

[Gabe]

My lawyer wants to use my large house payment for the means test. Otherwise I probably wouldn't pass.

I am about 3 months behind at this point on payments. What exactly should I say to the trustee during the 341 when he asks about the house? (Reaffirming it, being current etc)

Thanks

[monkatom]

I thought you had to be current on you're mortgage to do a chapter 7 if you are keeping the mortgage?? Anyone with more experience please chime in.

[HHM]

This issue is fairly case law specific, so I can't really offer any firm advice.

But, what ultimately is your goal with the house, by the way your question is worded, it seems like you are giving up the house, but your lawyer suggested that you state an "intention" to reaffirm so that you can use that payment amount on the means test?

Your issue is not going to be with the Chapter 7 trustee, it will be with the US Trustee. But, as monkatom pointed out, to "actually" stay in your home in a chapter 7, you "usually" have to be current on payments going in. Thus, if you are not current on your mortgage going into the chapter 7, AND the mortgage company files a motion to lift stay (to foreclose), that is probably going to alert the US trustee that not is all as it seems.

[Gabe]

I guess at this point I don't plan on keeping the house ($100k+ upside down)

[HHM]

I guess at this point I don't plan on keeping the house ($100k+ upside down)

Yeah, that is a good reason to bail on the house.

About all you can do is talk to your lawyer about this. Are rental significantly cheaper in you area than your mortgage payment, etc.

[Gabe]

From what I have seen from the charts, the $1100 allowed in my area for rent is far lower than my $3000 house payment.

(Actual rental for a reasonable area is around $1700)

Doh.

[HHM]

Based on your other post, you have already filed BK "a couple of weeks ago", so this is pretty much a moot discussion. Just let us know how it turns out.

[diviaruba]

After the car ownership allowance on the means test when the car is owned outright, this is THE most litigated issue under BAPCPA (the new law). Case law is still very unsettled across many districts as to the ability to deduct payments on secured debt when the underlying asset is being surrendered. You'll have an even more difficult time if you are not current on the obligations.

It's been said that the statement of intention is just that - what you intend to do - and is not a "self-effectuating" document. Moreover, the Chapter 7 petition is much more a snapshot in time ("a snapshot, not a movie", as one judge described it), as opposed to the 13, which is more forward looking.

A lot will depend on what district you are filing in, as there have been decisions on both sides around the country, although they seem to be running about two-to-one in favor of the debtor.

This case will give you a good flavor as to what the issues are and the citation of cases both for and against the debtor's position:

http://www.id.uscourts.gov/decisions-bk/Kelvie_Decision.pdf