Looking for feedback before attorney meeting...

[toff34]

I have a meeting with my attorney this Friday and I'm curious and worried going into it...

As of right now, I'm seeking out my options for bankruptcy. I filed Ch. 7 7 years ago due to losing my job and getting behind. I know that Ch. 7 will not be an option, so Ch. 13 may be my option. I'll be filing on my own since my wife only has 35,000 in SL to her name and she hasn't worked in 4 years.

My situation:

165,000 mortgage - not behind, owe 158,000. I want to keep the house and stay current.

145,000 student loans - not behind.

unsecured debt - 70,000

no vehicles in mine or my wife's name.

Family of 4 and will be just under on the means test...

I gross 5900 month...with that, I'm trying to figure out what kind of payment I'm facing and either 36 or 60 months.

[justbroke]

During your attorney meeting, they will likely go over your expenses and, more importantly, your "allowable" expenses relative to your income. The attorney will also determine if you have anything that you "must" pay during the Chapter 13 (such as past due income taxes). Only then can the attorney calculate what your payment may be. The attorney is going to be more accurate but not necessarily perfect.

You may want to look at a "Means Test" calculator which could give you an "example" of what your payment could be. There are too many other factors that could affect your payments, so I would take the Means Test calculator's calculation with some skepticism that it's on the conservative side.

Look at https://www.legalconsumer.com/bankruptcy/means-test/

Do you need or want a car? I would get one before filing a Chapter 13 because even 3 years is a long time to be in a Chapter 13.

You have one complicating factor, and that's the student loans. They go into deferment during a Chapter 13 and you would be forced to pay the unsecured debt alongside the student loan debt "pro-rata". That means the student loan debt would probably get about 66% (70000/210000) of any "disposable monthly income" (DMI) you are obligated to pay, but it may not be enough to even put a dent in those student loans. The loans would continue to accrue interest over that period.

You may not even have any DMI.

[toff34]

Thanks for the response...

So is the complicating factor of the student loan going to make this very hard for me?

If I don't have any DMI, will the CH 13 not work?

[justbroke]

I wrote that the complexity of the student loan -- actually the amount -- could make it difficult if you have no DMI at all. If you're estimating that you would pay your student loan debt, and not other unsecured creditors, then that is what specifically makes it a little more complex. Typically, you are not allowed to treat the student loan debt any differently than any other unsecured debt even though the student loan debt is dischargeable.

You also may be able to have the student loan debt classified with a higher priority than the other (general) unsecured creditors. That would allow all your DMI to go to your student loan debt. I can't tell you whether you'd be successful in having that distinction made. In either case, student loan debt would continue to accrue interest. The positive side is that you won't have pressure to pay while you're in an active Chapter 13 since the loan may go into deferment (while accruing interest) or otherwise be restricted by the automatic stay.

Example: prior to filing bankruptcy you're paying $1,000 a month towards student loans. You file a Chapter 13 and your DMI (which would include any payment that you "would" have been paying towards your student loans) is $1,000/month. Your student loans represent 66% of your unsecured debt and all unsecured creditors file a claim for the other 33%. While your DMI is $1,000/month, the payments to the student loan(s) would be $600/month and $300/month to general unsecured debt. That's because the DMI is split "pro-rata" between the unsecured creditors. (The reason it's not 66% of $1,000 is because the Trustee's fee is 10%, taking up $100/month of the $1,000 DMI.)

Make sure you consult with several (3-5) attorneys and ask them (specifically) if they know how to deal with student loan debt. Look at any option including receiving any sort of hardship discharge (or either the full amount or a smaller amount). Dischargeability of student loan debt is difficult but can be done in the right circumstances. Remember, possible but rare.

[dmc-2008]

Not to hijack the thread but is student loan debt dischargablr now? They deferred mine and did not add it to BK. I have been making the payment every month anyway because I didnt want it to grow!
But they discharge it now?👍

[justbroke]

Not to hijack the thread but is student loan debt dischargablr now? They deferred mine and did not add it to BK. I have been making the payment every month anyway because I didnt want it to grow!
But they discharge it now?👍

As you know, student loan debt has always been non-dischargeable, but you were always able to seek to discharge that student loan debt. The only current way to discharge a student loan, in bankruptcy, is to file a Complaint to Determine Dischargeability (under the Adversary Proceeding (AP) process) and have a judge find that the debt is a hardship.

I think this topic was more about whether they'd be able to continue paying their student loans. Not just paying on the student loans during the Chapter 13, but also paying them first (before unsecured creditors).

[leonel9]

I'm not sure if the OP's initial post addressed this, but I would also have more details about the home. Specifically what it's worth (a better guess than Zillow.com) vs. what the mortgage(s) total. If the amount of equity exceeds the exception allowable in your state, you may have to account for repayment in your CH13 plan in order to keep the house.

[dmc-2008]

Thanks for clarification.