Questions on filing

[dork]

Hello,

Looking for some advice regarding any options other than chapter 13 and/or what i should expect to pay in a monthly ch 13....

I make about $3000 (take home) a month from my full-time job, and another $1800/month working as a contractor on the side (pay not taxed). I spend $1300 on mortgage (owe 178k on a 180k mort), with a 2nd $350/month (owe 43k, mort 45k). House is worth about 205k. Currently 3 months behind on 1st, 1 month on 2nd.

I have utilities at about $600/month, another $1000 for daycare, and spend about $600 on gas (driving mostly for second job). Another $1000/month for food, car insurance, and local tax.

Credit card debt is $24k, payments about $800/month (paying different ones every month, though thats becoming more and more rare).

Car is $375/month, 2 yrs payments left (its getting old from all the driving, at 110k miles).

Since all my money is tied up in expenses...would i qualify for a chapter 13? Need to keep the house, and i dont really have much left over for much of a payment.

Also, if i do file, should i buy a newer car for reliability (if i even qualify for financing....credit is shot down to about a 540 rating)? I cant imagine this car making it through a 5 yr plan.

Other question....if my credit rating is already poor (from struggling to make payments for last several years), will bk make it that much worse? Not sure if i can afford to do a debt relief plan due to nothing being left over each month.

Am filing my taxes in a week or two (scrounging money to buy turbotax). Thanks for any help you may offer, hope to consult soon with a lawyer on my options...running out of time

[SMinGA2]

At first glance:

Net income $4800
Net expenses $4850 <---Not counting car, credit cards and I'm not sure if you've accounted for taxes on self employed income

Can you afford the house? Its a big chunk of your expenses. Any possibility of getting a modification with your 1st & 2nd to reduce the rate and therefore the payment? If not, could you rent elsewhere for significantly less? A ch. 13 would allow you to cure the arrears, but you'd still need to handle the regular payment + a plan payment.

[dork]

Sorry, forgot to include im waiting on word of a modification on the first (first applied about 5 months ago)....hard to find much cheaper property in this area, rented or mortgaged.

[SMinGA2]

Most ch. 13's (from my understanding) are people trying to save their house. If you can get the loan modified - that would bring it current and probably reduce your payment. Would you still need a ch. 13?

[Mayo]

With your income level, proper budgeting sounds to be your biggest issue. I'd trim down my debt and work out a solid budget and stick to it. Ch13 is an option but I'd make it my last if I didn't have to.

[dork]

I've been hoping to get the mortgage modified, feel like im just getting strung along.....been something like 5 months of calling every week, only to be told its still under review.

My budget is pretty tight as is, of the 4800 i bring home, 4650 of it is fixed expenses (cant do anything about daycare costs, gas (job is driving), food for 4, utilities, car ins, etc. Leaves me 150 for credit card payments and car repairs.

[karm43]

How many people in the family?

[dork]

4

[karm43]

Does your spouse work? Or are you single? noticed you have 1000 for daycare? You could also put your car in chap 13 for a cram down. Did you check the national standards for a family of 4? With your bills your payment would prob be mostly mortgage payments. Meaning you prob do not make enough to pay your unsecures. Sure more experienced will chime in. From reading I noticed its hard to get modification on your house unless your behind which you are. Planning is important! With 4 people you are allowed more so thats a plus.

[andy158]

Keep all your info on a spread sheet and start making appointments with bk lawyers.

[dork]

Wife does work, doesnt bring in much, about 1200/month, which is eaten up by car (400), student loans (300), insurance (150), and credit cards (350). She does not want to file in the event that i do.

Daycare is really 1000, 2 small kids.

Only thing in both our names is the 2 cars and the mortgages.....im hoping i can get a break on the car (worth about 4k in the shape its in), owe about 10k. Does it matter if her name is on it but doesnt file?

Im starting to make appointments this week...i have looked at the allowances for PA, most seem pretty much in line with what i spend, with the exception of gasoline (drive 150 miles/day)

[mountanddo]

Wife does work, doesnt bring in much, about 1200/month, which is eaten up by car (400), student loans (300), insurance (150), and credit cards (350). She does not want to file in the event that i do.

Daycare is really 1000, 2 small kids.

Only thing in both our names is the 2 cars and the mortgages.....im hoping i can get a break on the car (worth about 4k in the shape its in), owe about 10k. Does it matter if her name is on it but doesnt file?

Im starting to make appointments this week...i have looked at the allowances for PA, most seem pretty much in line with what i spend, with the exception of gasoline (drive 150 miles/day)

Right there if your wife stopped working you'd only be down by $200, if that. If you look at it rationally that is about $10/day without the expenses of working, i.e. gas, etc. So she is basically working to pay daycare expenses. In reality you'd probably see more savings than that if she didn't work.

[momofthree]

I agree with Mountanddo. Your wife works to bring home $1200, pays $1000 in daycare, and probably bumps you guys into a higher tax bracket come tax time too. Add in the expense of gas for commuting to work/daycare, professional clothing/uniforms, etc. you'd probably SAVE money each month if she quit working. She could also start paying attention to sales and couponing, and drop your grocery expense down. I know when I dropped down to working part-time, our grocery budget cut down by at least $100-$200 a month because I had the time to comparison shop and home-make more meals.

[SMinGA2]

What reasons does your wife have for not wanting to file? Is it something the two of you should discuss further, the topic of your overall financial health?

From the #s you posted - net monthly household income is $6000. Net household expenses, not counting cars & credit card debt & student loans is $5000. Meaning you could do a plan payment of $1000 which would essentially pay your vehicles off, attorney & trustee fees. You probably won't be able to trade your car in, since you describe it as $6000 upside down. (Kind of hard to get financing when you're upside down & stretched on credit resources already.) But if you're under the median income for your state, you could do a 3 year plan. At the end your wife would still have student loans.

Another alternative: your wife stops working. No more daycare bill. Plan payment of $800 a month, otherwise similar as above. One further benefit here is your household income in years going forward would be lower, and your wife's student loan payment - if she's eligible for IBR - would be much easier to manage. My AGI last year was $48k, family of 5, and my student loan payment is $110.

My opinion - and of course it means nothing in the overall scheme of things - is that if your wife will not file, then you shouldn't either. It just won't accomplish anything. If your household is still paying out $675/mo for her student loans & credit cards, then a ch. 13 won't improve your situation. You'll still be strapped, and still be relying on credit to get by. At some point you'll reach a wall where that doesn't work, and she'll HAVE to file. Or you'll default on your plan for lack of payment.

[dork]

We've talked about wife not working anymore due to the day care costs, however the deciding factor was that she pays the medical premiums through her job (family of four cost her $150/m)....getting them through my job instead run over $450...and nowhere near as good.

Thanks for all the advice so far, its alot to digest.