Chapter 13 - means test and lawyer

[njguy1972]

Hello all

I saw a lawyer last week to discuss my situation. He is a former trustee with over 20 years of bankruptcy experience. We had a nice chat and went through my situation.

He asked me for a lot of documents and did a means test.

I owe about 60k in unsecured debt (just started missing payments last month)
have a car with 2 years left of payments (current)
have a condo that is 40k underwater (current)
owe for some furniture ($1900 left to pay off)
student loans of $238 a month

After doing his means test he told me I would be in a 100% plan and would defer my student loans for 5 years.

When I did my means test I thought I was on the border line for ch7 based on exemptions. My realistic budget has me with disposable income of about $250-300 a month.

He basically went by the IRS guidelines only and said I am looking at $1000 a month.

He did not give me any exemptions at all.

I have a 401k at work that the company matches to 6%. He basically said no more 401k for 5 years.

I have a doctor's note that I need exercise because of weight issues and he did not include gym costs that either.

I am in 2 professional societies that are needed for work (not reimbursed) and he did not include those costs either.

Basically if I need to pay $1000 a month, I will probably lose my condo, have to spend less than $300 a month on food, not be able to buy clothes (even for work), and probably not even be able to afford cable and my cell phone.

Anyone else have similar stories where the lawyers went straight to the IRS guidelines and did not try to work for you with exemptions?

I thought Bankruptcy is supposed to help you with a fresh start and not take yur life away.

[BigJohn]

You have 2 years of car payments, was it a 5 year loan or more?

Does your condo have a nd mortgage?

Was the furniture bought with a furniture store credit card? And how long ago?

What is your gross wage?

Mortgage?

car payment?

etc.

[njguy1972]

it was a 60 month car loan with 24 left- $444 a month

condo has a mortgage and heloc

furniture bought with a special 0% rate until may 2009. Then it is like 28%

Wage is like 8500 a month

[AngelinaCatHub]

it was a 60 month car loan with 24 left- $444 a month

condo has a mortgage and heloc

furniture bought with a special 0% rate until may 2009. Then it is like 28%

Wage is like 8500 a month

Understand, if you do not pay that furnature loan on time (or before) that 28% will be from day one. Could bite you in the arse. 'Hub

[magyar123]

Well, you ran into a lawyer who once upon a time was a trustee - probably a creditor friendly ,creditors buttkissing trustee to boot, who knows dam well that the current trustees will get a bigger bite of the apple.

[laurannm]

I would definitely set up a free consult with 3-4 lawyers and get their opinions.

[liz417]

Wow, I would definately set up a few free consultations with other attorneys. I am over on a few of the IRS exemptions and have extra costs because of an 1-1/2 hour commute and toll fees and my attorney told me to put down 'what I pay out every month'... period. I think that you need to find an attorney that is going to represent YOUR BEST INTERESTS ONLY"...

Good Luck!

[fltoo]

What state? Check the exemptions.

Also, as in FL, when I looked it up on the website, it said you can use the actual amounts of mortgage and car payments instead of IRS guidelines. Check your state.

Agreed. Get a few more consults.

[njguy1972]

I think speaking to a 2nd attorney may be the way to go unless this is just a starting point for him. I had a friend that used the current guy and went chapter 7 with no issues.

[StartingOver08]

I am with the others on this - check other attorneys. The consults are free. IMHO stay away from Trustee's - what you want is a BK attorney that knows how the Trustees work. Knows what their quirks are. For example, my attorney told me that whenever my Trustee see's DirecTV, Dish or cable included in the schedules - the trustee gets a little PO'ed. Last thing I wanted to do was PO the Trustee. So before filing I made sure that the DirecTV was cancelled, receivers returned and completely paid up and it was not on the schedules. (I don't miss the TV anyway) These are the sort of tidbits you and I have no way of knowing without working with an attorney that knows the Trustee's habits and tastes.

IMO I think any attorney that is a Trustee or was a Trustee can not separate their duties enough to represent you with the vigor you need as the debtor. The duties to the creditors are too ingrained.

[brokeinfl]

Sounds like attorneys are kind of a crap shoot. Any website or publication rank the best in your area? I guess its still just a matter of your own circumstance though.

[mmenz22779]

On your means test if you gross 8500, that is a lot of income. You need at least 8500 of expenses. A form 22a is the means test for chapter 7, it is pretty easy to take.

I am over 20k on the means test but by the time you count my deductions i am way under.

There are some things you can do if you are stuck in a chapter 13 such as,

Increase your tax withholdings, your taxes are a a expense, start a Term life insurance policy contribute to a health savings account, Take out a 401k loan with a high payment amount (this sounds weird i know but you can use the payment as a allowed deduction for a chapter 13. use the money to pay some living expenses.) I say this because it is better to use your own money to pay for something like a mortgage and pay your self back with interest rather than pay a trustee).

I would disagree with your 401k contribution. There is plenty of articles that state a 401k contribution is allowed in a chapter 13, I would not contribute the entire 16000 but you could get by with a couple of hundred bucks. (Google this you will find the info) on the 22c it even says 401k contributions. Part V line 55 "Qualified Retirement deductions". Enter the monthly average of all contributions or wage deductions made to qualified retirement plans as specified in 541(b)(7) and (b) all repayment of loans from retirement plans as specified in 362 (b)(19)

is there any other way you can bring your income down for short time?.

Do you have children (you can enter daycare expense) (This is what saves me I spend 1650 for 2 kids).

of course if you do any of these changes you want to give your self at least 3-5 months after you make the change to file.