Living Within Your Means
Sometimes I just don’t understand how people get loans for homes that they just can’t afford. I have a client who makes about $70K-$72K a year. He makes plenty of money to pay all his bills, if his bills were reasonable. His mortgage payment alone is $3500, which doesn’t include taxes or insurance. His property taxes a year are $15,000.
I talked to the client and explained that he just can’t affords the house and needs to surrender it and move somewhere more affordable. Of course he is convinced he will be able to make his mortgage payments. I then explained that due to the amount he is behind to the mortgage company, property taxes, and IRS, in addition to making his regular mortgage payment each month, he will have a Chapter 13 Trustee payment around $1700.
Just the house payment, property taxes, and Trustee payment are more then he makes in a year. In these situations I always have the Debtor explain to me how they are going to be able to make ends meet because that is what they will have to do before the Judge. My client is working a deal that he claims will make him enough money to pay off the house. The problem with that is he’s not sure when the deal will go through.
I am regularly trying to get Debtors to realize they need to live within their current means, not what they think they will be making in the future. If they live on the income they think they will be getting, if they reach a higher income level they are so behind on their bills they can’t get caught up.
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