Wife's question

[repuman]

We're really close to filing, getting expenses/tax forms, etc, per attorneys instructions together. My wife is asking me a question I have attempted to answer but have only frustrated her further, so I'm tossing it the experts:
"If we only have $200-$300 left after expenses will the trustee allow us to file chapter 13 if we owe 60k in CC debt?"

[longhaul]

The means test determines whether you are able to do Chapter 7 or 13, and what you can pay. I downloaded both forms from http://www.justice.gov/ust/eo/bapcpa/meanstesting.htm, and filled them out to get an idea for our situation. It wasn't easy. I used the internet a lot for information. We were required to do 13 for 5 yrs - all unsecured debt of approx 110K, and based on our net mo income & expense, ended up with a payment of $356 (we opted for BK after we lost one income & lived on 401K loan to try to keep up payments until another job was found - but ran out of money 6 months ago & still no 2nd income today).

We kept our one car payment out of the plan as it will be pd off end of 2011. We had never been late, and wanted to pay the contract as agreed. Chapter 13 allowed us to continue the existing 401k loans (2) and the minimum matching contributions.

My advice:
Read all you can about both 7 & 13 processes - what's allowed & what's not.
Scrutinize your budget - Make sure to budget for things that aren't monthly - like vehicle maintenance (oil changes, tires, brakes, etc.), internet security renewals, tax prep fees, etc. so you can get the maximum amounts built into your budget that you'll have to stick to with a 13. Every expense will have to be converted to a monthly budgeted amount, so even if you only pay yearly or less frequently, if it's going to come up in the next 3-5 years, you need to include it. Use your bank statements to help figure out where you're money is spent.

Use the IRS withholding website http://www.irs.gov/individuals/artic...=96196,00.html, to calculate your expected tax liability for 2010 & change your withholding allowances, then review it every year. You want to be as close to 0 as possible - any tax refund will most likely be turned over to the trustee, and any tax due will most likely will result in your contacting your lawyer to figure out how to pay it.

Go into your lawyer's office armed with a list of questions - that's why you're paying the fees.

Get all your documentation in order - pay stubs, bank statements, tax returns, 401k statements, investment statements, etc. The trustees don't like it when you go to the meeting of creditors & your file is incomplete.

Things will go much smoother & faster if you do the homework, as painful as it is.

[sheilaE]

GREAT advice!!!