Chapter 13 - girlfriend's income/contribution

[BubbaGump]

I'm in Massachusetts. I have a girlfriend who (with her daughter) started living with me in March of this year. I pay $2,000/month for rent and "the usual" for utilities. Previously I'd been paying $1,650/month for rent and was the only lessor on my previous apartment. She has expenses for child care (and has never gotten the ordered amount for child support and can't get blood from a stone), so her fiscal contribution is limited to only about half of the groceries and occasionally some utilities. This fall her daughter is starting kindergarten (which I understand costs about $3,500) so she's all that much less able to contribute financially. There is a strong likelihood that she will be going back to graduate school within the next year, perhaps sooner.

I've consulted with an attorney regarding Chapter 13 bankruptcy (I earn way too much to file under Chapter 7, despite the unconvincing pleas from one of the "bankruptcy mills"). My counsel asked me about her contribution to the household, and I said that she contributes nothing more than her pretty smile. My bank accounts show very clearly that I am in receipt of absolutely no money from her toward rent, utilities, etc, and my grocery expense claim on the Chapter 13 petition (not yet filed) is roughly in-line with that of a single person.

It turns out with monthly expenses that my Chapter 13 payments would be about $80/month. Counsel advised me to "throw the trustees a bone" and claim that I'm getting money from my girlfriend (like maybe $200/month) that I'm not getting so I don't run into any hassles with the petition or confirmation of the payment plan. This would bump my payments up by whatever I'm alleging to be receiving. Over the past six months, I have no receipts of any such money, and there's no guarantee that she'll be able to contribute that amount (much less more) in the near-term future. There is a case from Florida (suspected abuse of a Chapter 7 petition) where a woman claimed to have a non-contributing roommate and that she'd been paying 100% of the rent prior to him moving in, and it was ruled by the court that the trustee cannot order somebody to find a paying roommate.

What problems am I likely to face in this situation? She's not contributing and can provide bank statements as proof if needed. We maintain separate finances and file separate taxes (not married). Her [limited] income has no bearing on anything I do financially, and she hasn't got the income to spare to basically just hand over to the trustees, nor do I have the extra money to have a court impute income I'm not receiving.

Ultimately, I'm the one signing the petition. I'm sure that counsel does have my best interest at heart by making this recommendation. However, I don't want to get in over my head with the trustees when I'm already beyond over my head in debt incurred from a very long and protracted (and highly pointless) contested divorce.

On a slightly different subject, what happens if I were to end up marrying this woman? Do I need to wait until the Chapter 13 has been discharged, lest her income become "mine" and the payments get adjusted because she's got an income (even if it's a part-time job she has while in school)? This is a daunting concept to put it mildly - "will you marry me and allow the trustees to take away some large percentage of your income for the next several years for the privilege?"

Would it behoove me (and us) financially for her to simply move out to her own place? Or would this open up a pandora's box of "you're paying too much for rent" and the trustees want more money or give me some sort of ultimatum to relocate (out of a <1 month old lease) to somewhere cheaper? I've already burnt a bridge with one large rental company by terminating my lease early and throwing it into the pool of creditors in the bankruptcy; I can ill afford to relocate again (or incur the expense of doing so).

Any expert or experiential guidance is greatly appreciated.

[StartingOver08]

It sounds like you need to speak to other BK attorneys. For the attorney to suggest that you "throw the Trustee's a bone" by making up a number is just wrong.

Make an appt with other attorney's - bring all of your information. Make sure that these attorney's are full time BK attorney's and not BK Mills -

[woeisme]

I think the problem might be that your rent is too high (although not familiar with the standards in your area, just that you identified this as a problem) so your attorney is suggesting that it won't fly with the trustee to claim this entire expense, and that in order to make a CH 13 work, you need to reduce your expenses (freeing up some disposable income) or increase your income (in this case by your girlfriend contributing financially). Generally, CH 13's won't fly unless you have a couple hundred a month in disposable income, $80 just isn't enough to fund it.

A side question: How would your girlfriend be able to pay rent if she moved out? If she's really not contributing anything to the household expenses, how is she going to have the money to pay her own household expenses separately.

As to your question about marriage, I know you said you make too much to file CH 7. Is that still true if you are a household of 3 instead of just 1? If girlfriend is really making so little money as to not be contributing to the household expenses in any way due to her own expenses, I seriously doubt she's going to "lose" any money by marriage to you, sounds like you are supporting her, not that she'd be supporting your BK payments. So anyhow, I don't think that should be a huge concern.

Good luck, wish I could be of more help.

[BubbaGump]

Support/contributions:
I think you've got a handle on the problem - $80 "isn't enough" and $2,000/month for rent would be construed as "too much". The g/f has an income currently but is spending (nearly?) all of it on child care, commuting and other expenses (such as putting the kid in kindergarten, which is costing in excess of what would be half the rent for over 4 months - these sorts of expenses is precisely why she can't contribute). In the not too distant future it's likely that she'll be going back to school and won't have an income at all (which would make the marriage thing completely moot). Either way, she's not contributing to the rent now, and she probably won't be in the future. But if I need to fabricate income to the trustees in order to "make this work"... I guess I don't understand what's going on - I can't very much change the situation so what am I to do? Suck on a payment of $280/month x 5 years because I had to throw a bone to the trustees to get this BS to squick through under the radar when my expenses dictate I shouldn't have more than $80/month of disposable income, and pray that I can cut costs elsewhere?

Chapter 7 v. 13:
The median income for MA for a family of 3 is something like $85,000 (give or take). I make half again as much as the median income on my own. I went through the Chapter 7 means test and failed every bit of it except when I got to section 6 (on the nolo.com version) where it compared the amount of debt I have to my income. Having close to $200k in debt versus 1/4 of my income there was a claim that I "pass". One of the bankruptcy mills claimed that I would pass the Ch7 means test, but that was based on me paying more for child support than I am now. I'm also using a substantial voluntary 401k contribution to keep within the bounds of the Ch13 means test already (which I can't do in Ch7). The counsel that I did retain said that Ch7 was impossible, that I'd be kicked out of the system on the presumption of abuse on account of my income. Being rightfully wary of the bankruptcy mills in general, I have a suspicion that he's right.

Marriage:
Correct me if I'm wrong, but the "problem" with getting married would not lie with her income itself, but more with having to justify the amount she's contributing to the household. Probably no different than the quandry I'm finding myself in now except right now I don't have that "legal" bond. No, she can't afford to move out - that's simply not feasible; that was merely a proposition placed out there as to "where do I stand here?" But what hoops do I have to look forward to leaping through in order to not punish her for this? If we were to get married, then the state and the IRS both become involved - how does this affect the BK? Would I simply file taxes as Married Filing Separate, keep separate bank accounts for several years and nobody need be involved past that, or is there just no way around going back to the trustees in a year saying, "Yeah we now collectively make $95,000 more than the median income, she won't be working because of going to grad school in 2 months, but here's our expenses (including care of her kid)" and somehow magically I don't end up having to pour -her- earnings into the BK, or is the best option to keep marriage out of the picture entirely for the next five years?

This all seems really complicated, and frankly quite daunting. Having an attorney is helpful, but by the same token, what has been some folks' experience with this type of situation. Surely this can't be all that unique, but by the same token it feels really complicated, and that no matter how I slice it somebody (most likely me) is going to end up getting the short end of the stick. I'm already in over my head 100x over - getting into a bankruptcy situation (when Ch7 is literally so damned simple comparatively), I'm getting more questions than answers at this phase. Hoping there's some helpful words of advice from which I can learn.

Thanks much.