ch13 or ch7 or neither?? What would you do?

[S2008]

Quick facts:
We're upside down on both homes --
Principal Residence
mkt value = 270K
1st mtg = 300K (refinanced)
HELOC = 33K (refinanced)

Rental condo
mkt value = 170K
1st mtg = 200K (no refi)
HELOC = 50K (no refi)

Credit Card debt = 100K

Income = 125K/yr (California)

1. Do you think there is a way to qualify for Ch7?
2. I still don't understand the advantages of Ch13. Is it a good option in our case?

Please help!

Thanks.

[MomIcantFindmy]

There is more to qualifying for a chap 7 or paying into a 13 than debt and income. How many dependents, do you pass the means test, you would likely have to surrender your rental property, etc etc. Start by taking the free online means test to find out where you stand. Then make appointments with 3-4 attorneys for consults. Check out the sticky posts on the threads here and you will go to your appointments with some good, hard questions. Welcome to the board and good luck!!!

[S2008]

Thanks for the info. I'm doing a lot of reading on this board to get myself up to speed on BK stuff. Here is more data of our situation and also a question:
1. Family size = 5 (my wife, 2 kids and a dependent)
2. No car payment. 3 cars (2 of them very old, probably worth $2K each)
3. Can we deduct tuition paid for part-time College courses when calculating disposable income? This is huge for us. We're taking $30K per year student loan for a part-time degree program. Expensive, I know. Will that be allowed to be deducted when calculating disposable income? $30K/yr is like $2500 per month.
4. How about day care expenses? 2 kids is almost $1800 per month.
5. Here is my first-pass disposable income calculation. Please let me know if I'm missing something:
Gross monthly income = $10400
Approx. tax (25%) = -$2600
Principal Res. 1st mtg = - $2000
Principal Res. HELOC = - $200
Day care = -$1800
Rental condo (negative cashflow: rent minus mtgs) = -$1200
College tuition for part-time = -$2500 (instead of taking out new student loan)
401K contribution allowed = ??
Food = -$300
---------------------------------------
This will bring down our disposable income to zero. Is this reasonable calculation?

Please adivse. Thanks!

[krielly]

You must have utility bills, home maintenance, automobile maintenance, gas, etc........... What about insurance premiums. check out other posts on here for items you may be forgetting.

One thing that REALLY stands out to me is your food budget. How on earth do you feed a family of 5 for $300/mo. That is incredibly low!!!!

K

[S2008]

You're right, $300 is way to low for monthly food expense (family size of 5).
I also left out insurance premium on cars.
Is 401K contribution allowed? I've read conflicting posts that say yes/no.

[krielly]

Yup, 401K allowances vary from state to state, district to district. An attorney in your area can advise you.

You should set up a free consultation with 2 or three in your area.

[Scott50]

I highly doubt the $2500 a month tuition cost is considered an expense for the means test.. Also- most trustees don't allow monthly student loan payments to be considered on the means test even though they are not dischargeable in bankruptcy

[krielly]

whoops. Missed that one for sure. Nope, that's not going to be allowable.
Student loans are typically placed in deferrment until after discharge.

[S2008]

Clarification: $2500 per month is not a student loan payment. I am in a part-time degree program at a local university. It costs me $2500/mo tuition. So far, I used student loan to pay for it due to my $$$ going to credit cards.

1. My question is how much tuition fee per month will I be allowed to deduct from my monthly income when calculating disposable income?

2. Related question: If I lose my job ($10K/mo) and decide to go full-time student for a year or so towards a degree program, can I file for BK? Will I qualify for CH7 then?

THANKS everyone for your help!

[Scott50]

I don't believe that the $2500 a month that you're paying for tuition would be a considered an allowable expense under the means test. Check with a an attorney in your area- most will meet with you free of charge..