New Policy RE: Using Mortgage Payments on Means Test?

[daytona]

My understanding and experience is the mortgage(s) are included in the means test. Just because you pass the means test does not mean the ttee cannot try to dismiss the case due to the "totality of the circumstances" which could include the fact that you have a large mortgage payment allowing you to pass the means test. Will they do it? Depends on the specific court and ttee. Just because the ttee might challenge, does not mean that they will win. You could have too much debt for a CH13, which could then try to force you into a CH11...but there is plenty of case law out there where even then, the judge will go ahead and allow a CH7 because of the burdens of a CH11 and the fact the creditors may still only get a few cents on the dollar.

[ValleYum]

Yes you are on the right track dear.

Hi patty123 and welcome to the BK Forum!

I would just like to point out that unless you are updating a post with substantial new information or are the original poster with an update to their particular situation, it is somewhat frowned upon to "bump" threads that are several months old. You will find this to be true on most internet forums.

For example, prior to your post this morning, this thread had not been posted on in over 7 months and your post, while kind and encouraging, was not IMHO worthy of a thread bump. It just makes things harder to navigate in the forum and since laws and policies change so rapidly it is best to stick to commenting on the recent threads.

But, no big worries as it is easy to understand that sometimes we are so anxious to lend our support or knowledge to someone that we fail to notice the date of the thread. Just my observation and opinion.

This forum is loaded with great information. I would suggest reading the stickies posted in each sub-forum to get you off to a great start! Please do feel free to start a thread with any questions you may have about your situation or concerns - we are a great forum with great people. Hope your day is super!

[patty123]

Yes you are on the right track dear.

[chiwawa]

My current monthly income just barely below the median income (about $50). I pass the mean test using the expenses allowance for local and national standards for California state. By using this allowance I have less than $100 at the end of each month. I like to save some money for a rental but worried if I not pay mortgage before I file. I cannot deduct mortgage/rental expense on form 22A. It would disqualify me for CH7.
Thank you for the support.

[discouraged]

iT is SCARY, but I stopped paying mine 10 months before I filed. I was (and still am) on unemployment due to a job loss but it made no difference with the trustee. My bk went smoothly.

[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.

[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.

[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.

[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?

[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)

[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]

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).

[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.

[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

[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