putting it all out there. Here's our situation.

[mslaw]

If you give your house up, I would wonder if that would be more dmi for them to take. Was looking at your state seems pretty cheap to live there. Renting for less will give themm more money. I would figure out what you spend on everything like braces def count but piano lessons probaly not, they consider that a luxury. I am sure your utlities food are way more then the avg. I bought a new car, should have bought 2. Watch if they tell you they will give you a car expense if you own, cause that not a law in stone. Sometimes they tell you what you want to hear to get your business.

You can't rent a house in the nearby city for less than 1200-1300 mo. So I'm not sure where you got the stats on renting/buying? Yes it's cheaper than say California but not cheap. Also, it says you can have entertainment expenses and even put down school expenses for your kids so I would think the piano lessons for our kids would count? It's part of education? Why do you think our food and utilities are more than average? Yes maybe more than the average 4 household family but there are 7 of us. That includes diapers, toiletries, etc. Utilities - our electric bill can be $200 alone per month and on some months we are spending $300+ for heating fuel.

We do not own a car. We have a lease that we aren't sure we are keeping. We will have to buy another van before we file if we decide we aren't keeping the van we are leasing (lease is up in Feb).

[papie]

You can't rent a house in the nearby city for less than 1200-1300 mo.

I live in Indiana and work in Kentucky, I'm pretty familiar with the rental markets in the area, and you certainly can find larger places to rent for less than $1200/month in the metro area. Granted, your children aren't going to have their own bedrooms, but from my own rental experience you can find a four bedroom home in the $800-$900 range in a decent neighborhood. It might not be ideal, but you only need five years, and then you can move on. You're largest hurdle in this area will be finding a landlord that will accept your credit. I find that the metro area is a tad more expensive than the surrounding areas.

If you would be willing to move across the river into Indiana, my landlord is awesome! lol You may be talking about a different city though.

[momofthree]

A few thoughts. I think you can make it into a ch.7 if you work at it. First of all, median income for a family of 7 in Kentucky is $85083, clearly you're over with both of you working. However, being under median is only the first hurdle. If you can show little-to-no dmi on your income/expense schedules (known as I and J on here), then you can still file a ch.7

First, on the income. They're going to make you count the bonuses when calculating income. You will be expected to keep that bonus and add part of it to each month to supplement your income and make it work. At $85k (using the highest figure), that would be $7083 per month. Minus out taxes, insurance, etc. I'll estimate that it's down to closer to $6000/mo. take home. Then, your income of $1400/mo - taxes, etc = $1200 take home (?)

So, we have an income estimate: $7200/mo.

Now, let's review your expenses. For a family of 7, I"m guessing that $7200 doesn't go nearly far enough, but keep in mind, you cannot count any unsecured debt payments (not even those pesky student loans that never go away). You also can't pick and choose which debts to include. It doesn't matter that that huge personal loan has a co-debtor. You can't include that payment in your list of expenses.

$1226 Mortgage payments (I'll explain below why I'm including this)
$200 home maintenance
$600 utilities
$2163 IRS standard for food, clothing, personal care items, household supplies, etc
$500 medical (may need to show proof)
$100 dental (braces, guesstimate)
$500 gasoline
$150 car insurance (this is a guess since you didn't list it)
$200 car maintenance, tags, etc.
$200 children's school expenses ($40/mo/kid)
$950 car payments (I'll explain below)
$100 term life insurance for both of you
$100 disability insurance for both of you
$150 recreation (This is only $21/person/mo, which seems quite reasonable, IMO)
=7139

Bam, your expenses are all eaten up. You're in a ch.7. If your medical expenses are even higher and you can provide documentation of the expenses, you can also include that.

Now, to explain 2 things: mortgage & cars.

First of all, the IRS has set up national standards as a guideline for expenses. As you see above, I have a few of them listed in your budget: use them! However, they can also work against you, which is why I listed your mortgage. The IRS standards for rent in Kentucky are low. Most of them tend to range between $600-900 a month for families 5+, depending on county. If you choose to rent right off the bat, you'll probably be a ch.13 and be stuck in a tight budget for the next 3-5 years, and may very well have a very difficult time finding a rental for the IRS standard amount. Rock, meet hard place. However, if you choose to retain your home, then you can use the actual payment of $1226. Here's the great thing about a ch.7 bk: It discharges your personal liability on your mortgage, so even if you choose to stay in the home during your bk, if, a few months later, you find it is simply too difficult to maintain that payment or decide to walk away at that point, you can! With zero liability!

Second point: cars. Get rid of the lease. Include it in the bk and walk away from it. Then, buy yourself 2 cars. Keep each payment below the IRS standard of $496/mo, but get as close as you can, because you need the expense. This will give you the allowable expenses you need to qualify for a ch.7. Think about it, would you rather have 2 new cars and a ch.7 bk? Or would you prefer to have 1 new car and a ch.13 payment? The choice is obvious, IMO. Since the company truck is only for work-related driving, you can argue that your dh needs his own personal vehicle for personal use. Although, the court probably doesn't even have to know about the company vehicle since you don't own it or have to pay any expenses for it.

If you haven't already, see at least 2 more attorneys and take the above expense list with you. You should be a ch.7 if you follow the above guidelines.

Also, if you find yourself running a bit short on expenses for any reason, increase your insurance coverage on your vehicles/life insurance, adjust your deductibles down, etc. to increase your insurance premiums. Buy a disability insurance policy. Insurance is considered a reasonable and necessary expense, so it won't raise red flags.

Good luck and keep us posted.

[ValleYum]

momofthree thanks SO much for putting that info out there for her this morning... I am headed out the door for yet another doctor's appointment and had left the monitor on this screen to jiggle my memory. Folks that take the time like you just did are why this is one of the BEST forums on the net. {{{hugs to you}}}

Another thing I thought of, if mslaw is planning on filing soon,would she need to STOP making ANY payments (hers or the person they cosigned with) on that unsecured debt she is a cosigner on so they could not possibly be considered a preference? Perhaps explain to the debtor -they are gonna know anyway since they will be listed.

[keepsmiling]

^What she said.
There was a mom here a year or two ago with a large family who managed to get higher rent for her large family approved, but it was MAJOR headaches and months of hard work.
Better not to traipse down the road when a far better plan has been outlined here for you.

[karm43]

Wow thats pretty good! Was trying to say in a round about way better off keeping it for now, then u could be free, but have to put things like necessity not luxuries.

[mslaw]

Thanks for the detailed explanation. I know that took a lot of time.

Question though, if we are including our house in a Ch7, wouldn't the amount still be based off what our mortgage is and not off a rental amt? I thought rental amt only came into play if we did a Ch13? I was under the impression, whether we were keeping the house or not, that we can include the mortgage amt as that is where we are living right now. Thank you!

[momofthree]

If you are surrendering the house within a ch.7 filing, then they can disallow the mortgage expense and instead use the IRS standard rent amount for your county and family size. In doing this, you would most likely be denied a ch.7 bk and have to convert to a ch.13.

If you claim that you are going to continue in the house, and "stay-and-pay" until your bk is closed, then you can walk away after that, free of liability. This way, you will qualify for the ch.7 bk discharge, and still get to surrender the house, just not immediately. Like a lot of bk law, it is ass-backwards, but it is what it is. You just have to play by their off-the-wall rules. ;)

[mslaw]

If you are surrendering the house within a ch.7 filing, then they can disallow the mortgage expense and instead use the IRS standard rent amount for your county and family size. In doing this, you would most likely be denied a ch.7 bk and have to convert to a ch.13.

If you claim that you are going to continue in the house, and "stay-and-pay" until your bk is closed, then you can walk away after that, free of liability. This way, you will qualify for the ch.7 bk discharge, and still get to surrender the house, just not immediately. Like a lot of bk law, it is ass-backwards, but it is what it is. You just have to play by their off-the-wall rules. ;)

I see. Our atty didn't mention not being able to use the house pmt as an expense. We are behind a few months on our payments so I don't think we can not include it in a ch7 right? Also would this be more like foreclosing on the house after the bk?

[SMinGA2]

But you will get to claim some amount for home rental - and how that is done will depend on the district. Your attorney is the best resource there. They may a) count your current #s for mortgage b) use an estimated rental expense assuming you've done legwork to know what to expect and can document that its a reasonable expectation or c) use county/state averages. I looked up KY's standards and for a family of 5+ the housing & utility #s range from about $1100/mo to $1800/mo. You can look to see where your actual county falls. If you happen to live in a county with a low #, you should probably talk to your attorney to find out what you need to do to have actual projections used. You are a larger family, but this category on the means test tops out at 5+. So perhaps a family of 5 in Cumberland County (example purposes only, I don't know where you live & don't need to) can do rent & utilities for $1103 per month. But a family of 7 might not be able to.

From the DOJ website:

Housing and utilities standards include mortgage or rent, property taxes, interest, insurance, maintenance, repairs, gas, electric, water, heating oil, garbage collection, residential telephone service, cell phone service, cable television, and internet service. The tables include five categories for one, two, three, four, and five or more persons in a household.

The taxpayer is allowed the standard amount, or the amount actually spent on housing and utilities, whichever is less. If the amount claimed is more than the total allowed by the housing and utilities standards, the taxpayer must provide documentation to substantiate those expenses are necessary living expenses.

The local standards include maintenance, repairs, cable, cell, etc. If your actual #s come up higher than the standards - or you think they will in a rental, make sure your attorney works with you so you can count realistic #s. Worst case scenario is you go into a ch. 13 based on housing of $X when your actual is higher.

[momofthree]

You may want to read Olivies story about the hell she went thru with the IRS rent allowance. It took her over a year of fighting the trustee and the courts, and she also had to struggle in a ch.13 for quite a while before she even attempted the fight for the ch.7 that she deserved. After reading, you'll understand why I suggest "keeping" the home so you can use the mortgage amount for your filing. She has quite a few threads on her ordeal, but this one explains how it all began...

http://www.bkforum.com/showthread.ph...rty-is-reached...

[momofthree]

As far as I know--someone correct me if I'm wrong--you only have to be current on your first mortgage when you file ch.7, not the 2nd. If you stop paying on your lease and all your debts, then you should have enough money to bring your first mortgage current before filing. Think of it this way: it will save you tens of thousands of dollars that you would have to pay into a ch.13 for 5 years. It is worth it. Plus, either way, you're gonna have to pay rent. If you are 4 months on your first mortgage, that is only around $3000 or so. 2 months of not paying on all of your debt (@ $1800/mo) will cover that without any problems. IMO, this is a much better option than 60 months of struggling. You do need to get an attorney who will fight for you to get a ch.7 though, so more consults are a MUST.

Here's what I suggest:
1. Stop paying on your debt.
2. Get caught up on your mortgage--should only take about 1.5 months.
3. Buy 2 new cars right before all the lates start showing up on your credit.

You should be good to go.

As always, consult with your attorney. I probably wouldn't go with the one you've already seen. Like I said earlier, find one that will fight for you.

And, honestly, your 2nd mortgage isn't going to foreclose when you are so far underwater. You may want to consider staying in your home for a few years, paying the $700/mo and saving as much cash as you can. THEN, stop paying and stay until you are foreclosed on, and move on if you are really unhappy in the home. I mean, realistically, you are probably not going to find a home you can rent for $700/mo with a family of your size.

[mslaw]

There's a lot more to our house issues. Such as possible mold. It isn't as simple unfortunately of just staying in it.

[mslaw]

For our county it says we are allowed $911 for rent plus $600 for utilities.

[mslaw]

Ok I read the link. It seems part of the problem for her was she had sold her house 3 years prior and had already been renting.