More Confused Then Ever....

[SJF75]

We meet with attorney #1. He said he only did the means test (not I or J forms) and he could tell we would definitely be in a 100% payback plan. He said the I or J would not matter because our income was just too high...even though most of my husbands income is exempt from the means test because its disability pay from the VA. I told him that husband was considering quitting his job because he is constantly in pain. He took that job to keep us afloat until he got is disability rating, but now that he has it....he needs to take some time off. The lawyer said...even that would not matter...we would still be in a 100% plan.

Something didn't feel right. I just felt like he didn't do enough work to come to that conclusion, so I went to anther lawyer.

Lawyer #2 says that we will defiantly be in a Ch13 (we knew that) but after doing the I and J forms, we could get it down to approx. 85%. Our disposable income, after doing the I and J is $2260 per month, before really going through our expenses with a fine tooth comb. I mentioned to her that my husband was considering leaving that job but lawyer #1 said it would not matter. She flat out said...if he leaves that job you guys can qualify for a Ch7. His income that he would be giving up is $2100 per month after taxes. It makes sense to me...but I am still wondering why the first guy outright said we would be in 100% plan, no matter what. What is really bothering me is that the first lawyer has GREAT reviews on AVVO and YELP....but the second lawyer has little internet presence???

Anyway...we have all unsecured debt, $115K and $17K student loan debt. No need for a 13 to save the house or anything like that. I would LOVE for my husband to be able to take the break he deserves. 20 years of almost always being gone and putting his body through hell, missing out on so many things with the kids etc etc but I am scarred of what would happen if he quit and our Ch7 got thrown out.

Does anyone have any thoughts....

Thanks in advance.....

[justbroke]

There is so much nuance in a Chapter 13 that only when someone does all of the income gathering, completes the means test (if required), and Schedules I-J along with the other necessities (such as the Chapter 7 liquidation test, a/k/a "best interest of creditor's" test) could someone come down to the bottom line. In a consultation, many attorneys only do the Means Test because it's pretty much a bunch of fixed calculations and easily done on the computer using a program like Best Case.

If the first attorney only did the Means Test then maybe they didn't have enough information to consider your spouse as being exempt from means testing and solely looked at your income despite the second job. As for the exemption to means testing itself, a qualified disabled veteran should be able to just check the box that they the means test does not apply (but as it reads on the form, it may apply later). The second attorney then went to the forms, Schedule I/J, to see just how much disposable monthly income (DMI) is remaining as a "second" step into whether you qualify. The more thorough Schedule I/J, which is "actual" expenses and income, yielded what you see as an 85% plan. With a DMI of $2,260 a month, that's $135K over 60 months which is quite possibly a 100% plan (still need to calculate attorney fees, trustee fees, priority debt, other allowable deductions and get deep into Schedule J.). I quickly jumped to that (100%) conclusion by just running quick numbers, which is probably what your first attorney consultation yielded.

When you told both attorneys about quitting the job, it didn't affect attorney #1 because they "probably" didn't consider the veteran exception on the means test, since they only did the means test. The second attorney already bypassed the means test, so plugging in only the numbers with the veteran disability income yielded a better result.

Just to add some more confusion for you... veteran-related disability income is not "exempt" income when it comes to calculating income under the bankruptcy code. The debtor him/herself is "exempt" from the means testing itself. If you are going into a Chapter 13, then there is no exemption/exception from completing the means test. This is probably because a Chapter 13 is considered voluntary and all income sources are fair game.

Keep shopping a couple of more attorneys until you are comfortable. Make certain that they understand that you want to bypass the means testing because a debtor is a disabled veteran and exempt from means testing under the guidelines. Also let them know, up front, that the disabled veteran debtor wants to quit their job and rely solely on the veteran benefits.

Those are my thoughts. The BKForum thanks your husband for his service and wishes the best.