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

[mslaw]

So I figure for you all to give me your input, suggestions, advice or personal experience, it would be most helpful to know the details. I feel our situation is tricky because of a. our family size. b. our unknown income/variables and c. because we ride the line between a ch7 vs ch13 due to income and expenses.

Income:
DH's- Salary 67,000 yearly. Bonuses generally another 25% of his salary so roughly 18,000 yearly but these are not guaranteed and the amount is based on performance and company success. However, we did have to include these in our means test and that sunk us.
Mine- This is tricky as well. My last 6 months are showing I make 30K a year. I do not now. I make roughly 1400 a month before taxes working 1 day per week.

Taxes: We are in a high tax bracket and the only reason we get a refund is because the bonuses are taxed at a high rate- approx 2500 month in taxes.


We bring home after taxes roughly 5,200 a month (not including bonuses).


Groceries and household supplies: 1000 a month. There are 7 of us and 1 is still in diapers. I cook all our meals and pack my kid's lunches. My dh does eat out at lunch at work.

Gas- this kills us. Probably easily $500 month.

Utilities - including propane gas for heat, $600 month.

Health expenses, copays, dental. $400-500 a month depending on winter vs. summer.

Car pmt, taxes, ins. - $525. This is a lease (2007 minivan). We owe 11k on it, it's worth 7-8k. Our lease is up in February. We will have a payment due at that time of 6K. We aren't sure if we are going to keep it or not? But our credit is shot so not sure we can buy something else.

House pmts. Our 1st mort is 721/mo (owe 99,000-house is worth 70,000 and we are NOT keeping it)

2nd mort is 370/mo.

House insurance is $60 mo.

Taxes are around $75 mo.

Unsecured, consumer loan in amt of 47,000. Bad thing is we have a codebtor on this and it is a relative so we cannot leave them hanging on it. pay $489/mo.

Student loans. Approx owe 30K and pay roughly $325 mo right now. One is late, the other 2 current. One has a codebtor on it through Sallie Mae.

Credit cards. Owe approx 25k. Pay roughly $800 mo.

That's not including what we spend for kid's clothing, activities, orthodontist bills (we have dental but no ortho insurance) etc. With 5 kids, even if they aren't spoiled (which they're not) it adds up.

Our car is 5 years old. We only have 1 to drive. Dh drives a company truck. It has 94,000 miles on it. Our oldest daughter will be 16 in 3 years. So stressful.

I know this is a lot of info. Any guidance is appreciated. Am I missing anything major that we need to account for? Our next meeting with our attorney is Monday and I'd like to be as educated as possible going in to the meeting.

[keepsmiling]

I don't have much time right now , and the experts will be along to analyze, but just wanted to offer a thought.
Why not see what kind of deal you could get on a car? Just look around and see so you can make an informed decision.
Once your lease expires, if you are in a 13- you could be in a pickle.

[SMinGA2]

Have you started to research your living arrangement options for once you've moved? Right now the house payments + taxes + insurance will amount to $1226. Assuming you'll be renting, you should not have major maintenance expenses but you'll lose the mortgage interest deduction. (Which would likely make for a slightly smaller refund.) Can you rent for less than what you're paying now? Is the present value the only reason you want to let the house go, or are their other concerns? Is it worth more or less than your first mortgage balance?

If housing stays the same (meaning you rent for the same ~$1226 you pay now) and you estimate ~$850 for clothing, school expenses, ortho, etc. (I don't think that is unreasonable for a family of 7-its probably low) you are at your $5200 net income. I did not count student loans. If you were to file a ch. 13, your SLs would only get payment during the plan at the rate of your unsecured creditors. You'd still owe any remaining balance after discharge. Also did not count credit cards or the unsecured loan.

If you could get into a newer car loan now, in the same range of your current payment, you could let the lease (and is impending balance) be wiped out in bankruptcy.

Can either of you reduce withholding for federal taxes to increase your net pay any? I know you said in another thread the bonus is automatically taxed at a high rate - but if you're overpaying there you can afford to withhold less during the year. It can make for more net income now, and it sounds like you need it.

In your shoes I would fear a ch. 13 because it would be near impossible to make a monthly payment. And the bonuses will be considered - your attorney seems to think so and he/she would know what is common in your district. I believe that is about ~$1200 extra per month on average. Perhaps you should go over your bank statements for the past year and come up with reasonable estimates on every expense. Clothing, school expenses, life insurance, etc. For a family of 7 - that could come out to a hefty amount per month on average. Also re-evaluate the groceries & household items. That might be low based on your family size. For a ch. 7, you need to be able to show that your DMI counting the bonus is too low for a reasonable ch. 13 plan.

[mslaw]

I don't have much time right now , and the experts will be along to analyze, but just wanted to offer a thought.
Why not see what kind of deal you could get on a car? Just look around and see so you can make an informed decision.
Once your lease expires, if you are in a 13- you could be in a pickle.

Thank you. By pickle, you mean the trustee could take it or we could have to start paying bigger payments?

We seem screwed no matter which way we turn at this point. Fresh start seems more and more elusive.

[keepsmiling]

I mean you could be car-less.
He can't take it, and you'd need court permission to get something else. PITA.

[mslaw]

Have you started to research your living arrangement options for once you've moved? Right now the house payments + taxes + insurance will amount to $1226. Assuming you'll be renting, you should not have major maintenance expenses but you'll lose the mortgage interest deduction. (Which would likely make for a slightly smaller refund.) Can you rent for less than what you're paying now? Is the present value the only reason you want to let the house go, or are their other concerns? Is it worth more or less than your first mortgage balance?

If housing stays the same (meaning you rent for the same ~$1226 you pay now) and you estimate ~$850 for clothing, school expenses, ortho, etc. (I don't think that is unreasonable for a family of 7-its probably low) you are at your $5200 net income. I did not count student loans. If you were to file a ch. 13, your SLs would only get payment during the plan at the rate of your unsecured creditors. You'd still owe any remaining balance after discharge. Also did not count credit cards or the unsecured loan.

If you could get into a newer car loan now, in the same range of your current payment, you could let the lease (and is impending balance) be wiped out in bankruptcy.

Can either of you reduce withholding for federal taxes to increase your net pay any? I know you said in another thread the bonus is automatically taxed at a high rate - but if you're overpaying there you can afford to withhold less during the year. It can make for more net income now, and it sounds like you need it.

In your shoes I would fear a ch. 13 because it would be near impossible to make a monthly payment. And the bonuses will be considered - your attorney seems to think so and he/she would know what is common in your district. I believe that is about ~$1200 extra per month on average. Perhaps you should go over your bank statements for the past year and come up with reasonable estimates on every expense. Clothing, school expenses, life insurance, etc. For a family of 7 - that could come out to a hefty amount per month on average. Also re-evaluate the groceries & household items. That might be low based on your family size. For a ch. 7, you need to be able to show that your DMI counting the bonus is too low for a reasonable ch. 13 plan.

Thanks. It is a mess.

We are looking into a rental and because we have 7 in our family, we had to look at decent size houses to not be on top of each other. The rent will be about the same, around 1200/mo.

I agree, 850 sounds more than reasonable for a family of 7. That's only around $150 a mo for each kid and nothing for dh and I . We pay $200 for just 1 in braces per month and I know that we have a couple more headed toward braces in the next couple years. We also pay for piano lessons and those are $160 a month. That doesn't include preschool for our youngest but he won't start until probably January. We do not qualify for any "free" or state preschool programs.

Our 2nd mortgage has a 35K balance. The home is deteriorating. We have an 8% interest rate and our lender won't give us a better rate. We are 2-3 months behind. So we owe roughly 134K on the loan and it's worth roughly 70-80K. And continues to depreciate.

I am with you, I fear a Ch13. We had hoped to get a fresh start and it's looking so bleak. We have nothing in savings. We own nothing of value. We have nothing in our 401k's. Our oldest dd goes to collge in 5 years and we have nothing for her. It's just depressing. When going into this, I thought we would be a shoe in for a Ch 7 but alas, our attorney doesn't think so. All we want is a chance at better and to have more security and less stress.

[mslaw]

I mean you could be car-less.
He can't take it, and you'd need court permission to get something else. PITA.

Can or can't? Thank you for being patient with me.

[SMinGA2]

The trustee can't take a car you don't own (you don't own a lease) and its uncommon to lose assets in a 13 anyhow. The concern I would have is its a lease and either you'll need to turn it in and replace it, or find a way to finance the balance owed. And you need trustee's approval to seek/get financing.

[SMinGA2]

The reason I asked about the home value and such is that one tool ch. 13's are useful for: 2nd mortgage stripping. If you owe more on the 1st than its worth, you can get the 2nd stripped/treated as unsecured and at the end of the payment plan its gone. If the house is in poor shape, that may not be good news for you. But if staying in the house with just the 1st mortgage would make life easier - you could possibly turn a $370 2nd payment into a $150-200 ch. 13 payment. With a thorough yet accurate budget & the right attorney, that is.

AS to the car situation - perhaps you should see if you can get approved for something now. If so, then taking the new loan and letting the lease go back might be a wise move as you need to think long terms regarding your transportation needs.

[mslaw]

The reason I asked about the home value and such is that one tool ch. 13's are useful for: 2nd mortgage stripping. If you owe more on the 1st than its worth, you can get the 2nd stripped/treated as unsecured and at the end of the payment plan its gone. If the house is in poor shape, that may not be good news for you. But if staying in the house with just the 1st mortgage would make life easier - you could possibly turn a $370 2nd payment into a $150-200 ch. 13 payment. With a thorough yet accurate budget & the right attorney, that is.

AS to the car situation - perhaps you should see if you can get approved for something now. If so, then taking the new loan and letting the lease go back might be a wise move as you need to think long terms regarding your transportation needs.

I understand, that makes sense. Thank you. We are pretty set on letting the house go back. It's just really not worth saving.

I am going to talk to the hubs about the car thing. it does make sense. we aren't really doing ourselves any favors to try to keep the van when it may hurt us down the road and we owe more than its worth and really something could happen to it anytime and it has no warranty.

[karm43]

Sorry just seen post that is really not that much for a family of 7. I would shop around maybe you could get a 7.

[mslaw]

Sorry just seen post that is really not that much for a family of 7. I would shop around maybe you could get a 7.

Thanks! I really feel the same.

[keepsmiling]

Taxes $75/mo.
I just had to do a double take.
That's might get you thru 3 days here. Really I don't know how anyone can actually afford to live in my state.

Do remember that when renting, you will lose your tax deduction. Your taxes are so minimal, so it won't be a huge difference, but you may want to factor that and your interest deductions into your calculations somewhere along the line.

[karm43]

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.

[karm43]

Noticed you have a unsecured loan with codebtor not sure what would happen with that. I would ask someone here with some knowledge.