What is a good way to calculate what a Chapter 13 payment might look like?

[Jenniferinfl]

My spouse and I have been trying to repay our credit cards for a couple years now. Our tax return goes straight to our credit cards. We've been getting by on around $400 a month for groceries and basics for a family of 3. It feels like every dime goes to bills and debts and the cards just creep a bit higher each month.
I had filed for bankruptcy as an individual around 8 years ago. I owed quite a bit and had lost my job, so I qualified for chapter 7. My husband didn't file with me because he only owed around $3000 and he had hopes he would find a job soon. A few years after that, I owed nothing and he owed $7000 in unsecured when he bought our house. Fast forward a few more years and I was still underemployed, part time and seasonal. I only finally got a full time job again 1.5 years ago. My work is very stable, I lucked into a job where a whole bunch of people were getting ready to retire. Even if a layoff did happen, (which only happened once in the height of the recession and only 6 people) there are currently twelve people between me and a layoff. The same situation exists at my husband's work. They would have to be going out of business for him to get laid off.

Our monthly take home pay after taxes and health insurance is $3286. We have a mortgage, two car payments and around 28,000 in unsecured credit card debt. Our gross income before tax is $63,592.

We live in Florida.

Is there any way to estimate what our monthly payments would be in Chapter 13? We aren't in the arrears yet, I keep shuffling things around with balance transfers.

It bugs me because it doesn't sound like that much debt, but at 20% for a lot of it, it's just been really hard to pay down.

My goal would be to keep the house and cars. One car loan is a year old the other one is 2.5 years old.

Any suggestions?

[justbroke]

You could go to http://legalconsumer.com and they have a free means test. However, I don't think it's "that" good for Chapter 13, but it could give you an idea.

[Jenniferinfl]

I looked at that and then just decided to work through the 22C form instead and see what I ended up with. Not including administrative expenses (as I'm not sure what those would be) I end up with a negative number. -$1233. That is just using the IRS standards with nothing extra.

From what I've read, I understand that I could fill out Schedule's I and J with leaner numbers than the national standards to get to a point where it showed that I could pay something into a plan. But, I've read a couple cases online and it appears that those tend to get shot down fairly often.

What a strange thing, is it possible to qualify for neither Chapter 7 nor Chapter 13?

Chapter 13 seems more attractive as I would like to not be able to acquire new debt for awhile to learn better habits. Additionally, we have cars and a house we'd like to keep.

[justbroke]

What a strange thing, is it possible to qualify for neither Chapter 7 nor Chapter 13?

The only way to not qualify for either is if you have disposable monthly income (DMI) or you exceed the limits for a Chapter 13.

So let's start with the Chapter 7 and DMI. If your DMI is negative, then you qualify for a Chapter 7 discharge unless there is something else prohibiting you from a discharge (such as having filed bankruptcy and received a discharge within a specific period of time). If your DMI is over $208 (or maybe more), then you may qualify for a Chapter 13 so long as you don't exceed the debt limits of a Chapter 13. If you exceed those Chapter 13 limits, then you would need to do a Chapter 11.

Back to your Chapter 13. If you have a $-1,300 DMI then that means you are still trying to keep property that you simply can't afford. The fact that you're using balance transfers and running up more debt really means that you have too much property (car payments and/or house payment) that your income doesn't support. Bankruptcy will never fix that issue.

[Jenniferinfl]

Maybe I filled it out incorrectly then. Insurance and operating expenses are $509 on the chart. For my county, mortgage and rent expenses are listed at $1044. So, I used those numbers. I'm not even sure what I would use for operating expenses, but, my mortgage has an escrow account which includes insurance and taxes and it's only $621. So, we bought much less house than we probably should have for our income because we were afraid of the eventuality of this. On a schedule I and J, I could obviously reduce the county allotment of $1044 right down to $621 which is my actual. Operating expenses I'm a bit more nervous about because that's where I would stick potential future home repairs, right? Our house is from 1977, so the occasional necessary home repair is a necessity.

The other place with an obvious overage is in cars. I bought a new Nissan Versa in 10/2015 and my payment is $202. My husband has a 2007 Ford Mustang that we threw the tax returns at the last couple years. His monthly payment is also $202. I have no equity in my car, upside down on it but would prefer to keep it anyways as it has an extended warranty through 72,000 miles that actually covers everything. We have about $1200 in equity in my husband's car. From what I understand, we could combine our 2 $1000 exemptions on that one car. Again, I would probably leave vehicle operating expense exactly where it is, which is the $440 national expense allowed. (His car recently needed expensive transmission work and I can't talk him into driving a Nissan Versa) My car won't have auto repairs for another 50,000 miles, I won't have any maintenance expense for another 16,000 miles. IRS standards allow $471 for each of us for our vehicle expenses. That's a combined total of $538 more than our actual.

Just those two things, my actual difference is $921 from the IRS national standards.
The last place we could really cut back would be food and clothing. National standards are $1249. We definitely don't spend that in a typical month. Groceries and toiletries come up to about $500 a month. $600 a month would be more than we typically spend and leave some wriggle room for odd months. I buy my clothes once a year on Black Friday. I buy 10 pairs of pants and 10 shirts for myself for $120 after sales and coupons. My spouse is a welder and buys his clothes at Goodwill. I have to buy our daughter's clothes more often as she's young enough to have sudden growth spurts that might put her out of her current clothes suddenly. Even so, I doubt I spend more than $200 a year on her clothing.

A big portion of the debt is from me trying to keep driving my 17 year old Honda because I was afraid of getting into a car payment. The car payment is so much cheaper than the repairs were that it makes me feel really bummed that I didn't buy a really basic new car sooner.

The hard part is, I'm not sure how to rough estimate the administration fees. I believe the bankruptcy lawyer would get rolled into that as well. I think I could find enough on schedule I and schedule J to be in the positive a bit, but, possibly not after admin since I don't know what that is.

[Jenniferinfl]

Oops, and I just found out that middle district in Florida uses NADA retail values which puts the Mustang at being worth more than we paid for it 2.5 years ago.. LOL How is that even possible? Additionally, I am now really, really glad that I bought the extended warranty. I paid $9,999 for my Nissan Versa, bought it new last year. According to NADA retail value, that is also worth more now that I've driven it 18,000 miles than it was worth when I bought it. Now it's somehow worth $10,175. Glad I owe 11k courtesy of buying the extended warranty. Either I'm really good at buying cars or NADA retail values are bloated $2-3000 dollars.

[justbroke]

Maybe I filled it out incorrectly then. Insurance and operating expenses are $509 on the chart. For my county, mortgage and rent expenses are listed at $1044.

Your mortgage expense is always what you actually pay (including taxes). You always get the operating expense for your vehicles (up to two).

The other place with an obvious overage is in cars. I bought a new Nissan Versa in 10/2015 and my payment is $202. My husband has a 2007 Ford Mustang that we threw the tax returns at the last couple years. His monthly payment is also $202.

For cars, you get the ownership allowance LESS what you pay the bank on your car loan. So if the ownership allowance is $479 and your car is $202, then you get $257 as an expense. (You also claim the $202 as an ongoing secured debt payment in another portion of the means test so that it balances out to $479. That keeps you from "double" dipping.)

I have no equity in my car, upside down on it but would prefer to keep it anyways as it has an extended warranty through 72,000 miles that actually covers everything. We have about $1200 in equity in my husband's car. From what I understand, we could combine our 2 $1000 exemptions on that one car. Again, I would probably leave vehicle operating expense exactly where it is, which is the $440 national expense allowed. (His car recently needed expensive transmission work and I can't talk him into driving a Nissan Versa) My car won't have auto repairs for another 50,000 miles, I won't have any maintenance expense for another 16,000 miles. IRS standards allow $471 for each of us for our vehicle expenses. That's a combined total of $538 more than our actual.

Yes, you can combine your exemptions if you're both filing. I would still claim the actual allowed expense (and your lawyer may do so on Schedule J).

Just those two things, my actual difference is $921 from the IRS national standards.
The last place we could really cut back would be food and clothing. National standards are $1249.

Do not ever EVER "crack down" on food expense. That number includes clothing and other miscellaneous items. If bread or milk goes up, what would you do? So I always tell people not to cut back on that food allowance, ever.

A big portion of the debt is from me trying to keep driving my 17 year old Honda because I was afraid of getting into a car payment. The car payment is so much cheaper than the repairs were that it makes me feel really bummed that I didn't buy a really basic new car sooner.

I bet that your attorney tells you to get5 new car! Getting into a 5 year Chapter 13 with an old car is just plain asking for trouble. You'll end up needing a new car somewhere down the road and the worst place would be while driving down the path of a 5 year Chapter 13 (pun intended).

The hard part is, I'm not sure how to rough estimate the administration fees. I believe the bankruptcy lawyer would get rolled into that as well. I think I could find enough on schedule I and schedule J to be in the positive a bit, but, possibly not after admin since I don't know what that is.

I think you really need to sit down with an attorney to estimate this Chapter 13. There are things that are a form of "art" when creating a Chapter 13 Plan of Reorganization. You can help, though, by listing very single expense you had for the last 12 months. Use your bank account, ATM receipts, credit card statements, etc, to find out what you REALLY pay each month. Unexpected expenses are what kill Chapter 13s for those that have not created the appropriate budget (think back to the food budget).

[Jenniferinfl]

Yeah, you're right. I need to go in and discuss it with someone if this is something I want to do. I already had a chapter 7 over 8 years ago. It's nauseating to think of doing another chapter 7. I filed pro se. It was easily one of the most stressful times in my life. Though, in some ways it was easier. I had moved and couldn't afford to move stuff so had donated a lot. When I wrote up my belongings I had very little. Now I have a 1600 square foot house that I have just filled with thrift store finds. How do you come up with a value for a dining room table you picked up off the side of the road on garbage day? I definitely won't be going the pro se route this time. I may even just wait. Maybe nothing awful will happen and we can put the tax return onto the credit cards and buy ourselves more time. Maybe it's not that bad. I mean, some of my credit cards show they will be paid off in ten years paying the minimum. If I can just avoid having anything else end up on them, maybe there's a shot. Maybe I could have been more aggressive with using balance transfers and paid less interest to make more of a dent. I've been ignoring and paying the minimum and occasionally throwing extra on a small balance card without actually paying attention to the big picture. Logged into CreditKarma for the first time in several years and got the big picture all at once and immediately started panicking. We're still able to make minimums, our credit isn't ruined yet. It's tight, but, maybe I can cut something out. I did find an attorney online whose website I particularly like the tone of, you can tell he really cares about bankruptcy as that's all he does. His reviews on AVVO are great too and he's not even the most expensive out there. I think the most terrifying thing was realizing that I have been putting the car insurance on a credit card for the last year with exception of one payment. My finances felt tight without that coming out of my bank account. Ugh! I don't carry my credit cards anymore and I cut up the ones that were at a 0 balance last year. When I logged into creditkarma I really thought I was going to see that my credit card debt had decreased, not increased.
Sounds like I need to do a lot more math.

[justbroke]

How do you come up with a value for a dining room table you picked up off the side of the road on garbage day?

It's worth what you paid for it, less depreciation. Always think "yard sale" prices when evaluating your personal effects.

Sounds like I need to do a lot more math.

Indeed! Think of this as a financial decision and nothing else. You'll need to see what works for you personally.