Our situation - any answers appreciated...

[Mrs. H]

Here's our information:

We live in New Jersey.

We have a house and 2 cars. We are buying one car and leasing the other.
We are seeing lawyers about filing a Chapter 13. The financed car is only a few months old and the leased car is only a year old.

Our monthly gross income is $6550. That's $4800 take home.

The monthly expenses:

mortgage - $2200
2nd mortgage - $640
financed car - $250
leased car - $262
car insurance - $132
electric & gas - $220
water - 65
cable & internet - $100
home phone & cells - $150
medical & prescriptions - $100

The biggest problem:

My mother has been living with us for 5 years (out of a 6 year marriage). She works in retail and makes very little money. (It's $14,000 per year if you need it.) She pays her own few bills and lives with us for free. No rent. Nothing. We do not claim her as a dependent on our taxes. (I do all the housework, cooking, etc. - she is incapable of handling anything of the sort. She lives with us because I have no brothers or sisters and no relatives who want her with them - even her own sister.)

Also important:

We have no human children but have over the years adoped some cats. Four were adopted and one showed up on our doorstep - so five total. Being animal activists, they are, of course, all spayed or neutered, all strictly indoors, microchipped, wear collars with nameplates anyway and all see the vet yearly for shots and their yearly exam. The one cat is also borderline diabetic and, as of now, it's a special diet plus bloodwork at the vet every six weeks.

So, I'm wondering if anyone else here knows of any similar situations? If so, how were they handled in a Chapter 13?

I'm afraid that we're going to be left with such a tiny amount of money left every month that the Ch. 13 payments will be impossible. Of course, to a trustee it will look like we have more money than we actually do because of Ma's small income. We would definately be willing to give up the leased car if that will help us at all.

Any input would be appreciated.

Thank you,
Mrs. H.

[lrprn]

Ok, let's see what you have here....

Assuming your family income has been consistent over the last six months ($6550/mo + $1166/mo from mom = $7716/month X 12 = $92,592/year. New Jersey's median income for a family of 3 is $80,239 - you are well over that. It's likely you will be required to file Ch 13.

Adding up your expenses you have listed, that comes to $4119. You are missing other expenses that could be added in - see http://www.ca-bankruptcy-attorneys.c...alculator.html for a good list of allowed expenses.

As far as your pets go, the bk forms have no designated spot for pet expenses. Most trustees do not allow pet expenses to be openly added in, so most lawyers find a way to add the expenses in to categories that are allowed.

I'm afraid that we're going to be left with such a tiny amount of money left every month that the Ch. 13 payments will be impossible.

You won't know what your payments are going to be until your lawyer runs your information through the Means Test. Your lawyer is the only one familiar with all the aspects of your case, so he/she is going to be the best source of reliable answers for your specific situation, including what is best to do with your cars.

Hang in there! Getting to filing is often the very worst part of bankruptcy. You are making progress. Keep asking questions and we'll help you sort things out as much as we can.

[Mrs. H]

-

Thank you for the response.

Our biggest concern is Ma's income. I know it will be factored in even though it will only be "on paper" - we will never get to use any of it.

This is why we are freaking out. We are going to look like we have a lot more money than we actually do. Therefore, we are assuming that we will have larger payments to a Ch. 13 than the REAL income (not including Ma's) can handle.

Yes, there are a lot of other expenses that we could claim, but we are hoping to base everything on the 2 of us. My mother is not a contributor to the house in any way at all and is not listed as a dependent on our taxes.

We would absolutely go without for ourselves in order to take proper care of our cats. They are more important to us than anything.

I hope this makes sense? Any more advice would be helpful to say the least.

Thank you.

[BKOnce]

Easy, then do NOT include ma salary in household equation. No tax exemption, no dependent, so no listing on BK froms as dependent and/or household member/income either. Just treat her as separate household under IRS rule. Don't need to tell trustee she lives in home either as her own I-1040 is solid proof of her independency (as just a roomate boarding same house or another separate head of another household).

[CATCHMEIFYOUCAN]

You didn't include you food expenses ??? I have 2 cats, I included the pet food within my monthyl grocery expense !!! No other comments.
Don't forget about clothing expenses: surely you buy extra underwear and socks throughout the year!

Best of Luck, CMIYC

[lrprn]

Easy, then do NOT include ma salary in household equation. No tax exemption, no dependent, so no listing on BK froms as dependent and/or household member/income either. Just treat her as separate household under IRS rule. Don't need to tell trustee she lives in home either as her own I-1040 is solid proof of her independency (as just a roomate boarding same house or another separate head of another household).

Interesting point, BKO. Mrs. H, this is definitely something worth checking out with your lawyer. Without Mom's income, you'll slide in just under the NJ median income and could file Ch 7.

Just curious - how did things end up with Mom living in your house and although she has a job and makes a little money, she contributes nothing to help out in your household?

[Mrs. H]

-

Now, so If I'm understanding this correctly -

Ma's income is NOT a factor at all? Even though she lives in our house and our address is on her tax return?

I'm not trying to challenge anyone here because I really do respect all of the advice that I've seen on here. It's a sanctuary for so many of us.

The one lawyer we saw asked a trustee friend of his about this and they couldn't even give him an answer. I'm like "Why?"

You have no reason to lie to me - and I'm sure wouldn't - and it's just that I SOOOOO want to believe that we can base everything on the $4800 take home income and not Ma's at all.

Of course, that means that we'll just get the expenses for two as well. That would be OK. Even then, I'm trying to figure out where the trustee payment factors in? After our bills alone PLUS giving up the leased car, we will have like $900 and change. The food and other expenses plus the trustee payment would have to come out of that.

I can play with the rest of the numbers again and again - but could I just hear the part where Ma's income doesn't factor in - one more time?

(And - as a side note - I'm just 35 and my husband is newly 42 - the "Ma" I'm talking about only recently turned 57 years old. I'm saying this because I'm wondering if anyone else here is as surprised as most people are when they hear this?! Yes, I have tried to find her a husband many, many times. To the point of propositioning decent-looking men for her - even myself - as a married woman - in front of my own husband...sad, but true.)

Thank you again for taking so much time in answering me in my depressed, insane paranoia. I was kind of holding it together until recently.

[Mrs. H]

Aaaah -

There it is!

I just saw the post as I was writing mine.

When I got married I moved in with my husband, of course. Ma was left in the house we used to also live in with my uncle (her brother). He got married and sold the house and moved into the house his wife owned. Having no brothers or sisters - it was only me.

Thank God my husband is a saint, and an only child as well. From the day I met him- and well before we were married - I made the situation very clear that someday - Ma might have to come live with us. We never expected it to be so soon.

We always say that we don't need to have kids because we already have a full-grown one. She is basically a 57 year old spoiled brat. But, there are no arguments because we give her her way as much as possible to keep the peace.

She sees us as her main form of entertainment and chooses to have very few friends. She is basically up our butts night and day.

It makes it harder that our personalities are so different as well. My husband and I are uptight perfectionists (so why are we filing a Ch.13 right?) and she is laid-back and carefree. I suppose it's because she has never had to take care of anything on her own ever.

We're clean freaks - no one even knows that we have any cats when they come into the house - and she, well, let's say that I would never let her touch my house for cleaning or my stove for cooking. She can, however, use the microwave upon free will. Yes, we do her laundry as well.

My husband is amazing and if I were him - I probably would have left a long time ago. Unfortunately for him, he says he's in it for the long haul. Poor guy.

When I show this to him, he'll probably laugh, I hope.

Oh, I never really answered the question - she pays her car bill, her small credit card bills, her life insurance bill, once in a while she will pay to take us out for dinner. That's it. My husband and I would both find it impossible to ask her for any money towards the house. Could it be a NJ-Italian-people thing perhaps? "Take care of your mother" and all? Strange upbringing?

[Mrs. H]

Sorry - triple post, but -

back to the facts...

The income is $78,000 without Ma - if we claim only 2 people - then we would still be above the median for 2 people in NJ I think, right?

It looks like Chapter 13 anyway in order to keep the house, which we have always been paying on time. The lawyers we've been talking to say the Ch.7 is way too risky with the house, even though we've been told there's basically no equity in it. They keep telling us that they're going to FIND equity. The house is in a pretty good area for real estate. Maybe that's why-?

(How come my husband can sleep just fine through all of this?)

[HenriettaHen]

Mrs. H, I think YOU'RE the saint.....

But back to the Mother's income. And first let me qualify this by saying that I don't know about the house part - but as far as the income goes.....

It seems like .... If Mother contributes no money to your income in any way (and she does not), then her income is not your income as far as your bankruptcy is concerned.

However, she is part of your household. You should track this down, but I do believe that you can list (on the means test) the actual number of people living in your household, and you do not have to be listing them as dependents in order to do so.

You own the house, she is living in it with you. She does not contribute to your household income, but you do feed her and maintain the home for her. She contributes to your EXPENSES, not your income.

I listed 2 of us in the household, even though only one of us was filing. I would have fallen under the threshold anyway, even as only a household of 1 - but it did allow me higher expenses.

Hope that helps a little - I would recommend that you study up on this point and then "educate' your attorney, if necessary.

[Mrs. H]

Well,

thanks again for the replies. (I really don't feel like a saint at all right now, but it was nice to hear that!)

Here's what's going on now -

This one lawyer has now given us two free consultations. He made it clear that they were absolutely free, too. One was over 2 hours long and the other - yesterday morning - yes, on a SATURDAY - was an hour and a half.

So, I'm thinking he must be hurting for business.

Although we do like him and he's very, very free with his information with no obligation to use him whatsoever - well, let me see if anyone else here sees the following as red flags...

He told us outright that if we wanted to file a Ch. 7 - which we don't - then he would refer us to another attorney.

He gave us a large explanation of why the one judge in our area is much more lenient than the other. As if we will get a choice!

He said he will absolutely be including my mother's income. He talks a lot about keeping us under the radar. (I really don't think I would be this worried if I was trying to do something illegal, man.)

He said that $500 was EXTREMELY HIGH for food costs for 2 people - but I'm like - "Um, that's 3 people if you're including Ma's income, right?"

We actually do not even get to claim all of the allowable expenses, but rather will have to lose the leased car to make the expenses we listed and make a reasonable payment to a trustee. The actual words were something like the trustee won't expect us to have a gift allowance when we owe $80,000 in credit card debt. (C'mon, do I need any more pain?)

So, here is the anticipated list of the expenses:

Please keep in mind, the actual amount of money that we will have in hand per month (God willing) is $4800.

mortgages w/fixed rates (1st & 2nd w/property taxes and homeowner's ins.) = $2800
financed car = $250
car insurance = $100
electric/gas = $200
water = $65
cable/internet = $100
phones/cells = $150

That comes to $3665.

That leaves $1135 for food, gas for the car, prescriptions (mostly for allergies) that cost around $100 a month and the cats' costs. With the one cat's bloodwork as of now plus potenitally insulin - the cat costs could come to about $200 a month. Oh yeah, and a payment to a trustee.

He said that home maintenance was not really a necessary expense. He said that the cat costs could not be shown on the expenses. He would up the clothing allowance to allow for the "extra" food expenses. What are we sows? No, but we do buy cleaning products and like to have personal hygiene. And yeah, I would like some new socks and underwear once in a while, goshdarnit!

He says our trustee payment will be anywhere from $100-200 a month for either 36 or 60 months. Well, that sounds like quite a difference to me. He said he believes, though, that the payment would be about $125 per month to the trustee.

So, I'm taking the $1135 left and subtracting (actually consults calculator) the potential $125. That leaves $1010.

Lemme see, this is New Jersey and things are rather expensive here. About $250 per week for the stuff mentioned above sounds somewhat doable - in the instance that the trustee payment is really the $125 or so.

Does this sound realistic? Is this a lot of money if it works out? It certainly doesn't seem extravagant to me by any means. I am wondering if anyone here cares enough to chime in?

Also, as a side note - yes, we are seeing other lawyers still to see how they would handle the whole "Mom thing."

So, I'll wait patiently to see if any other kind souls care to be nice to me (please, because if you don't - yes, I will actually cry!) and give me an answer.

Something along the lines of "Sweetie, you're delusional" would be fine.

(Wow, it's 4:38am here and my brain is mush now. Sure I'll edit 50 times later on.)

[SinkingFast]

The Median for NJ for a family of 2 is $63,357/yr.

I agree about not including Mom in your BK. Since she does not contribute funds to the Household and you do not claim her on your Income Taxes,.......... Basically she is a seperate Household living at the same address, under the same roof as you. The Census Bureau allows for seperate Households to occupy the same residence. So this is not a new concept.

BUT,.............. You want to be very sure there aren't, or haven't been, any checks written from Mom to you or DH. That can be verified by bank statements. If your name is on any of Mom's accts for emergency purposes, get your name removed.

I know how you feel Mrs. H. My Mom has been living with us for 25 of 27 years of our marriage. Neither Bro nor Sis wanted her to live with them. A short visit is all they could/can tolerate. I know all too well, the "up your butt feeling" you have.

[SinkingFast]

When it comes to BK, the Court does talk in terms of bare necessities of life.

As Lrprn mentioned, many Trustees do not allow for pet expenses. So people "hide" money for pets in other areas of their budget.

Our Schedules Allowable for food is $1300/mo for a family of 6 where we live. One attny was gonna cut us back to $600/mo. Another was gonna allow us $700/mo. Our attny filed us at a generous $850/mo. Still way below the $1300/mo allowed by the DOJ.

One thing we did to get extra money for "food" was pull out school and work lunches. Our attny listed those as "Other" at the bottom of Schedule J. They were itemized out on an attached 2nd sheet.

Since you both work outside the home, be sure to budget for "work related" expenses that are allowable. Hair care, dry cleaning, and clothes are things that are potentially necessary to your employment.

[Mrs. H]

-

Thank you for the good advice. Yes, I still would love to NOT list her. Let's see what the lawyer says at the next consult on Wednesday night... We're moving along and looking at a filing date of perhaps September 1st. So much to do...


to SinkingFast -

Wow. 25 years with Mom. After that, the bankruptcy would almost seem "easy"-! Just gives us a little something else to look forward to...

Bless you! Bless all of us!

[HenriettaHen]

Hey, I'd think twice about that "free" lawyer.

Ask him why he is including Mother's income. (Since you never see a red cent of it ) Talk about red flags. Might as well include the mailman's income while he's at it. Sheesh! What's his rationale, pray tell?

"He said that $500 was EXTREMELY HIGH for food costs for 2 people - but I'm like - "Um, that's 3 people if you're including Ma's income, right?"

What a maroon.

I get the feeling that all this talk about "keeping you under the radar" is actually keeping HIM under the radar. Call his bluff and tell him you want to try for Chap 7 - see if he actually refers you out.

When I went to hearings during this process, I did a lot of listening, since I was pro se and wanted to glean every iota of information... well, without putting too fine a point on it, the conversations I heard between lawyers (behind clients' backs) were QUITE cynical and avaricious.

You gotta watch these guys, they're in it for the money, after all. See several more before you make a decision.

And don't take any more crap about being scared of trustees or judges - this guy is projecting fear onto you to give you the creeps so he can "save you" from the Big Bad Judge. What BS. Have respect for the system and the people working in it - but don't buy into the Sopranos mentality.

Remember - you are at one of the most vulnerable points in your life - look these dogs right in the eye until you get one that licks your hand. Chase the rest off with a stick.

Oh, yeah - I love lawyers.