Will surrendering my house disallow a chp 7?

[sjr1]

I am brand new here and have learned so much from reading all of your posts! Here's my question...

My husband and I are in the process of gathering paperwork to file for chpt 7 (job loss, $56K in debt). We are upside down on our mortgage, and with the $2700 mortgage payment, even if the debts get discharged like we hope, we still barely make ends meet. Plus, when the loan resets in 2009....

If I want to surrender/include/not reaffirm the house in our 7 filing, does the court now look at our income as being that much greater since we won't have the $2700 per month payment, thereby making us ineligible for a chpt 7?

If the court assumes we won't have a mortgage payment after the 7 is discharged, will they just use the IRS allowable expenses to figure out what our disposable income will be? If that's the case, will they convert us into a 13? I think if they did our trustee payment would be like $1200 or something (the IRS allowable expenses are pretty low.)

[lrprn]

This is a hotly contested area of bk law right now. Some judges have ruled that any asset that will be surrendered as a part of the bankruptcy cannot be included in filing expenses. Other judges have decided the asset's costs can be included.

If you haven't already retained a lawyer, you need to make free or low cost appointments with 3-4 experienced bk lawyers in your area to get a reliable answer to your question about how surrendering the house will impact your filing. It will give you a chance to ask all the other questions you have as well. Start making those appointments - you'll be glad you did. And if you have already retained a lawyer, he/she should be able to answer this question for you.

(And sjr, please don't post the same question in two forums at once - it's against the rules here. I deleted your duplicate thread - there were no answers yet. It's much better to ask your question once in the most logical forum area and keep all the answers you'll get in one place. You will actually get more and better answers this way. Thanks!)

[sjr1]

Sorry about the duplicate post. I wasn't sure which forum was the most logical -- thanks for the heads up!

We've had an initial consulation with one lawyer, but the question didn't come up, b/c at the time of that meeting, I thought we would keep the house. However, since that meeting I've called and left 4 messages with questions (this being one of them) and no one's called me back. Bad sign.

Had a phone consult last night with a different lawyer. He assured me that in MD the judges WERE allowing the house to be included in expenses. He said he has a case right now where this is going on. He also told me to quit making mortgage payments now, and since the process of foreclosure with BK takes so long, we could possibly live in the house with no payments for up to a year. I think a year may be pushing it, but even if it's 6 months that would be great.

Is it state specific on which judges allow the expense and which don't? Also, what about the money you are saving during the months you aren't paying? Won't the courts include that in your assets and end up taking the money anyway?