Seen a Bankruptcy Lawyer today and have many questions.....

[Guest123]

I'm not sure our 13 would pass.
We don't qualify for 7, we make too much.
We didn't even qualify for the 13 at first but we have 2 months of overtime each year to give us an extra $20K a year toward the plan.
This gave us a $490 a month payment.
Will that even work? We know the OT is guaranteed, but will the trustee?

Also we are letting the house go, but I didn't see the 1st mortgage listed in the "who gets paid in what order list". He basically broke it down to show us who gets paid first.
I seen the Attorney, the vehicles, taxes, trustee and then unsecured.
We have $93K that is unsecured and that includes the 2nd mortgage, but not the 1st.

Is this correct or did he show us what it would be if we kept the house?
If this is how it is suppose to be what happens to the mortgage payment when you let it go, do it just go away?

Thanks

[muzzey58]

Chapter 13 is based on your disposable income and the amount of debt that you owe. We filed back in November 2006. If you don't plan on keeping the house then I'm sure that that debt will be canceled depending on how much the bank gets for it. My husband lost his condo back in 2005 before we got married. He owed around $70,000 on the mortgage. The condo sold at auction for $75,000. So he didn't list the foreclosure on the bankruptcy. Our bankruptcy was based on a high payback rate. I was working at the time of the filing and our first attorney soaked us at 80% to payback. I had to quit work because of a shoulder injury. We hired a new attorney and our payback rate was reduced to 55% of the debt.
I'm not sure if the Trustee would consider overtime actual income. If your planning on paying back 100% of the debt then they might consider the OT.
You would payback a percentage of the debt depending our your disposable income. Disposable income is money left after all the necessary expenses are paid. That includes rent, utilities, car payments, car insurance, health insurance, food. The attorney will give you two forms to fill out. One form is for the income and one for housing expenses. Then they will figure out your payment based on the two. After all our expenses we had about $1400 left to pay the court. Which was ridiculous at the time. Our new attorney managed to get the payment down to $250 every week or around $1100 a month to the court. This gave us enough extra money to live on. We were barely paying our bills the first few years. My sister only paid $300 a month and 36 month plan because of her income. I am the opposite. We pay $1100 a month/60 month length.
The thing that bothers me is that we don't own a home at that rate. It's only old, very old, credit card debt. In Ohio unsecured debt can be kept on the credit records for 15 years.
So I would definitely talk to a lawyer or several lawyers to get a idea for what you would pay and what rate and length.
Please don't use one of the TV bankruptcy lawyers who advertise. That's where we went wrong. They are too busy to help you.
Call your local bar association lawyer referral line to find a good attorney. I did and I got a good one.
Best wishes.

[momofthree]

When you get the 2 months of overtime, is it 2 months in a row? Or is it 1 month every 6 months? How is it spread out? I ask because all that the means test uses is a 6-month lookback. So if those 2 months of overtime are within a 6-month period, you can time your filing just right and it won't appear on your lookback and therefore, will be omitted from the means test. If you can qualify for a ch.7 without the overtime, then do so! I'm surprised the attorney didn't suggest this. Interview a few more attorneys.

And I wouldn't tell anyone that the overtime is guaranteed. Nothing is guaranteed in this economy. Just because it's always happened in the past and is expected to happen in the future doesn't mean that it's guaranteed. I'd definitely downplay the availability of it, in any case.

[Guest123]

When you get the 2 months of overtime, is it 2 months in a row? Or is it 1 month every 6 months? How is it spread out? I ask because all that the means test uses is a 6-month lookback. So if those 2 months of overtime are within a 6-month period, you can time your filing just right and it won't appear on your lookback and therefore, will be omitted from the means test. If you can qualify for a ch.7 without the overtime, then do so! I'm surprised the attorney didn't suggest this. Interview a few more attorneys.

And I wouldn't tell anyone that the overtime is guaranteed. Nothing is guaranteed in this economy. Just because it's always happened in the past and is expected to happen in the future doesn't mean that it's guaranteed. I'd definitely downplay the availability of it, in any case.

The overtime is around Nov and May.
Even without the overtime we don't qualify for a Chapter7 and without the overtime we don't qualify for the Chapter13.
We make too much for the Chapter7.
And we don't make enough to file Chapter13 as they are lumping our car payments in. We only have a DMI of $500 without the overtime and that wont even pay on of the cars off in 5 years.

I agree that even though the overtime is guaranteed it is not something I wanna rely on. So what do we do.

The only option I see is to just take a $1500 payment, that should make them happy. It will cut into our expenses but we will have more than what we have had the last few years. We will bring alittle extra in on the overtime months but hopefully we can use that to cover some of the expense we cut down on.

I have been searching for those that made too much for chapter7 and not enough for chapter13 but have found nothing. So hopefully we are not in some grey area.

We make $89K salary a year but have ended up with a gross oif $120K in the past years. I think we are on track to make just under $100K this year.

Will be calling a few lawyers today.

Thanks

[walkthaplank]

Median income is only half of the equation in deciding whether or not you are able to file CH7. The other half is the means test. If you don't have the means to fund a CH13 with allowable expenses, then you can file CH7. Many lawyers don't want to take a chance on having to fight for you and just want to push you into a CH13, they make more money from you and generally only have to do the same amount of work. Unless you NEED to file a CH13 for some reason, like to protect assets or pay back taxes, see how the means test plays out for you.

I would not include that 2 months of overtime in your filing because overtime is NEVER guaranteed. You may have gotten it every year since you started, and you may EXPECT to get it in the future, but there is no guarantee, don't lock yourself into something like that. If you get that 2 months in one part of the year, plan your filing so that the 6 month look back doesn't include it. If you are borderline being able to fund a 13, that means you are borderline being able to file a 7. You are better off being done with it rather than being under the trustee's thumb for 5 years.

Talk to several lawyers, have them run your numbers and see what they say.

[Guest123]

Median income is only half of the equation in deciding whether or not you are able to file CH7. The other half is the means test. If you don't have the means to fund a CH13 with allowable expenses, then you can file CH7. Many lawyers don't want to take a chance on having to fight for you and just want to push you into a CH13, they make more money from you and generally only have to do the same amount of work. Unless you NEED to file a CH13 for some reason, like to protect assets or pay back taxes, see how the means test plays out for you.

I would not include that 2 months of overtime in your filing because overtime is NEVER guaranteed. You may have gotten it every year since you started, and you may EXPECT to get it in the future, but there is no guarantee, don't lock yourself into something like that. If you get that 2 months in one part of the year, plan your filing so that the 6 month look back doesn't include it. If you are borderline being able to fund a 13, that means you are borderline being able to file a 7. You are better off being done with it rather than being under the trustee's thumb for 5 years.

Talk to several lawyers, have them run your numbers and see what they say.

I have just contacted a few more lawyers.
I have done the means test and don't qualify for a chapter 7.
We would rather file a 7. We want to let the house go and get a fresh start.
We don't have much assests to protect, we have very little to show for all of the debt we have.

I don't know if it is borderline if we can't file the 13
When the lawyer plugged in the numbers we had a payment of $500 a month for the 13, both cars were included in the plan.
The cars total $60K
That wouldn't even pay off one car plus the lawyer, which is why we didn't qualify without adding the overtime.

But I get what you are saying about the overtime and is what had me scratching our head when we left.
I think it would be hard to adjust our payments 4 times a year for the overtime months. I don't see a trustee relying on overtime.

Thanks for the responses and keep them coming.

[Guest123]

I have just contacted a few more lawyers.
I have done the means test and don't qualify for a chapter 7.
We would rather file a 7. We want to let the house go and get a fresh start.
We don't have much assests to protect, we have very little to show for all of the debt we have.

I don't know if it is borderline if we can't file the 13
When the lawyer plugged in the numbers we had a payment of $500 a month for the 13, both cars were included in the plan.
The cars total $60K
That wouldn't even pay off one car plus the lawyer, which is why we didn't qualify without adding the overtime.

But I get what you are saying about the overtime and is what had me scratching our head when we left.
I think it would be hard to adjust our payments 4 times a year for the overtime months. I don't see a trustee relying on overtime.

Thanks for the responses and keep them coming.

EDIT:

I just talked to my original lawyer and he said the house was included but not on the list......I guess they don't get paid.
He also said that we make too much to file a Chapter7 and we HAVE to include the overtime to submit enough DMI for a payment that would cover the cars, laywer, trustee and some of the unsecured debt.

We also have 2 quads (4wheelers) that were are current on and wanted to keep if possible. He said since they are titled vehicles they need to be treated like the cars and that they move up on the priority list the trustee pays. I'm perfectly fine with this but does it effect the means test or anything?

[goon]

I just gave back a house as part of my ch13 in AZ ... in AZ they cannot come after you for the deficiency on a foreclosure/surrender on the first (or a second if it was used for purchase). So the first mortgage bank will just get whatever they make from the house at auction, that wont get paid out of your plan.

In some states this is handled differently. In my case I also have a second, the second was obtained to make home improvements after the purchase, so given that I was WAY upside down (owed $154k on the first and $37k on the second, house sold at auction for $39k) the second becomes unsecured debt and gets paid essentially the same as credit cards.

[goon]

oh and from what I understand with the quads, you "may" be able to keep them, but your plan would have to pay the unsecured lenders at least the equity that you have in them ( as you are probably already using the vehicle exemptions). Someone will probably chime in with a better explanation of this.... but because they are recreational vehicles, there may be objections from the unsecured creditors.

and yes because they are secured debt they would get paid off before unsecured debt, which would reduce the amount going to unsecured debt.

[Guest123]

I just gave back a house as part of my ch13 in AZ ... in AZ they cannot come after you for the deficiency on a foreclosure/surrender on the first (or a second if it was used for purchase). So the first mortgage bank will just get whatever they make from the house at auction, that wont get paid out of your plan.

In some states this is handled differently. In my case I also have a second, the second was obtained to make home improvements after the purchase, so given that I was WAY upside down (owed $154k on the first and $37k on the second, house sold at auction for $39k) the second becomes unsecured debt and gets paid essentially the same as credit cards.

Thanks this is what I wanted to hear, I wish the lawyer would have explained it like this.

oh and from what I understand with the quads, you "may" be able to keep them, but your plan would have to pay the unsecured lenders at least the equity that you have in them ( as you are probably already using the vehicle exemptions). Someone will probably chime in with a better explanation of this.... but because they are recreational vehicles, there may be objections from the unsecured creditors.

and yes because they are secured debt they would get paid off before unsecured debt, which would reduce the amount going to unsecured debt.

Yeah, the lawyer said that we could keep them but we would have to paid the remaining balance on them.

I just need to see how they will work the payments for the loan after they calculate the overtime. Being that our overtime is alot less this year, if they go by the last 6 months we would pay alot more.

We need to file, I just need understanding how they will work the overtime into the payment and how it will effect us on the months there is no overtime.

[goon]

I just need to see how they will work the payments for the loan after they calculate the overtime. Being that our overtime is alot less this year, if they go by the last 6 months we would pay alot more.

We need to file, I just need understanding how they will work the overtime into the payment and how it will effect us on the months there is no overtime.

So being in AZ, just my experience here. My monthly income was calculated by taking 6 months paystubs, adding together, dividing by 6. Which actually screwed me over because I had received a bonus just within that 6 month back window and had been told that we would not get quarterly bonuses going forward until further notice.... yet that bonus is factored into my income going forward. I could not wait any longer to file at that point so that is just what I had to do, (I also have a baby coming at the end of the year and will be able to make some "changes" then anyway).

Once they had my income number the subtracted my allowed expenses from that to come up with my DMI (disposable monthly income). This is what I have to pay each month.

I was also told that if there was a significant change in pay that we could "recalculate" things, but that again they would pull 6 months paystubs and divide by 6 (which I will do as part of increasing my expenses when the baby comes and at that point I will not have had any bonuses in over a year).

[Guest123]

So being in AZ, just my experience here. My monthly income was calculated by taking 6 months paystubs, adding together, dividing by 6. Which actually screwed me over because I had received a bonus just within that 6 month back window and had been told that we would not get quarterly bonuses going forward until further notice.... yet that bonus is factored into my income going forward. I could not wait any longer to file at that point so that is just what I had to do, (I also have a baby coming at the end of the year and will be able to make some "changes" then anyway).

Once they had my income number the subtracted my allowed expenses from that to come up with my DMI (disposable monthly income). This is what I have to pay each month.

I was also told that if there was a significant change in pay that we could "recalculate" things, but that again they would pull 6 months paystubs and divide by 6 (which I will do as part of increasing my expenses when the baby comes and at that point I will not have had any bonuses in over a year).

The 6 months stubs we pulled for the lawyer list an average of $7152 take home pay. A regular month is $4962 take home.
Our income is changing alot this year. Hopefully a lawyer can figure it out and explain it better to us.

[Guest123]

More questions:

A few discussions and some informations we found out brought up some questions.
Looks like we will not be able to include the overtime as it will be fazed out from our position.
So with that if we don't qualify for ch.7 according to the Means test and fail to have DMI that will fund a ch.13 What Do We Do?
Just learned about the overtime situation Friday and been thinking about it all weekend. Contactig the lawyer via email first thing Monday morning to see what he says.
Even after looking into the look forward ruling I still don't see how they could have used it to fund the ch. 13 or how the trustee would allow it.
I'll go over the means test again tomorrow and post the results here if needed. I know for sure we are over the median.
Our lawyer figure DMI around $500 but we would need around $1300 to just pay our secured debts/cars, lawyer and trustee. $1300 is just not doable.
What our our options?
Anything I should ask the lawyer that I have over looked.

Thanks

[Pandora]

More questions:

A few discussions and some informations we found out brought up some questions.
Looks like we will not be able to include the overtime as it will be fazed out from our position.
So with that if we don't qualify for ch.7 according to the Means test and fail to have DMI that will fund a ch.13 What Do We Do?
Just learned about the overtime situation Friday and been thinking about it all weekend. Contactig the lawyer via email first thing Monday morning to see what he says.
Even after looking into the look forward ruling I still don't see how they could have used it to fund the ch. 13 or how the trustee would allow it.
I'll go over the means test again tomorrow and post the results here if needed. I know for sure we are over the median.
Our lawyer figure DMI around $500 but we would need around $1300 to just pay our secured debts/cars, lawyer and trustee. $1300 is just not doable.
What our our options?
Anything I should ask the lawyer that I have over looked.

Thanks

Guest123 - thats what we were trying to tell you in this posting but you got so very defensive and told everyone they were incorrect.

http://www.bkforum.com/showthread.php?63440-High-trustee-payment/page3

You can still do a Ch. 7 if you are over median but have neg DMI (meaning you do not have enough to fund your plan to pay secured items, lawyer, and trustee fees). You may have to just let the vehicles go....

I wish you all the best and hope you can get it figured out.

[momofthree]

More questions:

A few discussions and some informations we found out brought up some questions.
Looks like we will not be able to include the overtime as it will be fazed out from our position.
So with that if we don't qualify for ch.7 according to the Means test and fail to have DMI that will fund a ch.13 What Do We Do?
Just learned about the overtime situation Friday and been thinking about it all weekend. Contactig the lawyer via email first thing Monday morning to see what he says.
Even after looking into the look forward ruling I still don't see how they could have used it to fund the ch. 13 or how the trustee would allow it.
I'll go over the means test again tomorrow and post the results here if needed. I know for sure we are over the median.
Our lawyer figure DMI around $500 but we would need around $1300 to just pay our secured debts/cars, lawyer and trustee. $1300 is just not doable.
What our our options?
Anything I should ask the lawyer that I have over looked.

Thanks

Your overtime will fall off of your lookback as of Dec.1st, so just wait to file until Dec. and then file a ch.7. You will probably have to let the quads go though, and possibly other secured debt as well so that you can make ends meet after the ch.7.

Sorry about the cut in pay Good luck and keep us posted.