New Policy RE: Using Mortgage Payments on Means Test?

[DirkDiggler]

We met with our attorney today and he said as of Dec 2010 there is a new policy regarding using 1st and 2nd mortgage payments on the means test and we wouldn't be able to use the figures on our means test, unless we re-affirmed our mortgages. Is this true?

[discouraged]

Hope, actually know, one of the more knowledgeabl efolks will chime in, but didn't happen with me. My attorney used both and everything went fine. I did not file until March 2010.

[shark66]

AFAIK, incorrect unless it's a local CA thing which I doubt.

Good luck.

[newbie2]

Talk to another attorney. It sounds like this one is using a ruling that involved car loans, and applying it to mean home loans.

[angles]

To me it would make sense provided the filer intended to vacate the property. But then some reasonable rental costs would have to be included in the schedules adding to the possibility that there could be some debate about that number from the Trustee.

If the filer plans to pay and stay…it makes no sense, as a mortgage is a large debt that should not be shouldered by the filer. It defeats the purpose of filing for BK.

Either way, I don’t see this as benefiting the process. Hopefully our government is wise enough to see this. Obviously this is a ploy by our industrious banking system looking for another avenue to improve their bottom line.

[DirkDiggler]

Yeah, we want to do a stay and pay but don't want to re-affirm....I didn't think it was right when he said something....but he mentioned something about the trustee filing a 707b (something like that) if the 1st and 2nd mortgage is used in the means test, even though we want to stay and we are current on both mortgages

[keepsmiling]

Been living on this forum night and day for a year and first time I've heard that. Still consider myself a newbie, but I'm gonna take a stab here.
Could be that if the intent was to surrender, you'd have this issue--- but even then you'd need to include some amount for a place to live.
I found this on a google search:http://lawprofessors.typepad.com/ban...on-707b3-.html

[SunshineGal]

We met with our attorney today and he said as of Dec 2010 there is a new policy regarding using 1st and 2nd mortgage payments on the means test and we wouldn't be able to use the figures on our means test, unless we re-affirmed our mortgages. Is this true?

Are you sure it was the MEANS TEST and not the schedule J? I'm no attorney, but the means test is supposed to include all debts you're liable for so the two mortgages would be included unless the foreclosure had already occurred. As for the schedule J, if you chose "surrender" on your schedule of intentions, I can see it being a problem to include the amounts, but if you elected "Other" as in a stay and pay, than in order to continue to occupy the property you would still have to pay the mortgage payment. It IS possible to pass the Means but show too much disposable income on Schedule J to qualify for a 7.

[DirkDiggler]

Are you sure it was the MEANS TEST and not the schedule J? I'm no attorney, but the means test is supposed to include all debts you're liable for so the two mortgages would be included unless the foreclosure had already occurred. As for the schedule J, if you chose "surrender" on your schedule of intentions, I can see it being a problem to include the amounts, but if you elected "Other" as in a stay and pay, than in order to continue to occupy the property you would still have to pay the mortgage payment. It IS possible to pass the Means but show too much disposable income on Schedule J to qualify for a 7.

We never even discussed and schedules....we had turned in our info and $300 to them to do the means test, and this was our meeting after they had done it to discuss what to do. After we had talked a bit and we had discussed the reasons why we cannot do a Ch 13, he started to work with us, and softend on his stance on this issue. I'm guessing the issue is in the Statement of Intentions....not to mention we owe about 300k on a 150k house so I'm guessing he just assumed that we don't want to keep it (which is partially true, but we want to do a stay and pay until we can figure out what to do ie. sell/rent out/let go).

[keepmine]

not to mention we owe about 300k on a 150k house so I'm guessing he just assumed that we don't want to keep it (which is partially true, but we want to do a stay and pay until we can figure out what to do ie. sell/rent out/let go).

I'd not put another nickel in a house with that much negative equity. Just let it go. Live there as long as possible before you get evicted and save that mortgage payment for deposits and moving expenses,etc. You likely can live there a year or so before they finally boot you out.

[DirkDiggler]

I'd not put another nickel in a house with that much negative equity. Just let it go. Live there as long as possible before you get evicted and save that mortgage payment for deposits and moving expenses,etc. You likely can live there a year or so before they finally boot you out.

The problem is we need to use the payment amount to get past the means test. Not to mention the IRS standards for rent is HORRIBLE (ALL the IRS standards are way too low IMO)

[DirkDiggler]

Sorry to bump my thread, but if I'm understanding it correctly, it all hinges on the Statement of Intentions....if I state that I intend to keep my house with a Stay & Pay, then I can use the mortgage payment on the means test and Schedule J, am I correct? I guess my only concern is can the Trustee force me to re-affirm the mortgage?

[SunshineGal]

I cant remember what we listed on the statements of intentions, probably reaffirm since that was our plan in the beginning. In the end, our mortgage payments were used on means and schedule J, we did not reaffirm, and it wasn't an issue. As for the trustee forcing you to reaffirm, I don't think they would...or even could. Then again, I'm not an attorney and I know nothing about CA BK laws, lol. What we have seen lately is trustees trying some crazy tactics to try to recoup money from upside down houses and its so new I don't think there is a lot of case law on it yet. This is really a question for your attorney, have him/her explain to you in detail why you wouldn't be able to use it.

[chiwawa]

Hello and thank you all.
I am planing on file for CH7 around Sept-Nov because of my income. I want to surrender the house is upside down. Can I not pay my mortgage one month before I file? My worried is that the UST think that I have money to pay my creditors because I does not have the mortgage/rent expense. I talked to an attorney and was advice that I can stop pay my mortgage one month before I file if I don't have the money.

[keepmine]

Hello and thank you all.
I am planing on file for CH7 around Sept-Nov because of my income. I want to surrender the house is upside down. Can I not pay my mortgage one month before I file? My worried is that the UST think that I have money to pay my creditors because I does not have the mortgage/rent expense. I talked to an attorney and was advice that I can stop pay my mortgage one month before I file if I don't have the money.

You should stop paying all debts you wish to discharge in bk.Use that money to pay your household expenses instead of sending it to creditors.