All My Questions So Far About Chapter 13

[moe]

I hope I won't be a pain but this whole thing is so complicated.

I have a bunch of questions.

(1) Are there any links or places where we can find out about filing separately for 13? I want to file but my husband cannot. I realize his income will count as my income also, etc. But how do I do the means test? Just halve everything? I make more than he makes so is that at all relevant?

(2) Is there a cap on daycare expenses? I ask because daycare is soooo expensive where we live. Au pair is a reasonable option where we live. But if we got an au pair would that look like 'fancy' daycare? It's actually cheaper than a daycare center where we live.

(3) What is a good place to find out a really good means test list for everything we can put into the means test.

(4) I know about 'look backs.' They do the last 6 months of income right? Our income dropped and is dropping. I am pregnant and having a kid puts a damper on my ability to earn extra money.

(5) I am a professor. Part of my job means doing research. I need daycare for this research over the summer. Are they going to make me take the whole summer off from research? I simply cannot do that. It is an expectation of my job that I publish research.

I have a lot of expenses that are related to my work but I doubt I can get those to count...It kind of sucks though. I get the feeling just the spirit of the thing is nothing extra but I hope keeping my career afloat is not considered 'extra.'

[keepsmiling]

Hi Moe,
I see you've been hanging around here a long time and not moved on this yet--- kinda like me I'm stuck in the position of not being in a better place afterwards.

But you, otoh, are still paying all those minimums? Why can't your hub file too? Do you and he have joint debt? How do you know you need a 13? Have you visited an attorney or two to talk about your situation? If not, I think it's time.

As to daycare, my guess is... as long as your numbers aren't so insane as to be considered luxurious... it is what it is. And since you are actually working in the summer, your attorney should be able to battle that situation for you. It should be generally recognized that profs are expected to research and publish. It's your lawyer's job to craft and fight for a reasonable plan . Remember that any tt objections may ultimately come before a judge- the tt doesn't necessarily get the last word. And surely, you won't be the first professor in your district to file.

If you want to tell us about those other work related expenses, perhaps one of the pros can comment.

[LadyInTheRed]

keepsmiling is right, you need to consult with some attorneys and make sure you don't qualify for a Chap 7.

You can get an idea of whether you can qualify for a Chap 7 by using this online means test calculator: http://www.legalconsumer.com/bankruptcy/means-test/ But, the calculator should not be used as a substitution for the advice of an attorney.

In answer to your questions:

1) On the means test, there is a column for each spouse's income. Here's the Chap 13 form that is the equivalent of the Chap 7 means test: http://www.uscourts.gov/uscourts/Rul...rent/B_22C.pdf In Chap 13 it's form B22C called "STATEMENT OF CURRENT MONTHLY INCOME AND CALCULATION OF COMMITMENT PERIOD AND DISPOSABLE INCOME". The allowable expenses are the same as in the Chap 7 means test (form B22A), so using the means test calulator linked above will give you a good idea of what the Chap 13 form will look like.

2) There is no cap on daycare expenses. As long as you can document that your expenses are reasonable in your area, you should be fine.

3) In addition to the means test calculator that will automatically enter your allowed expenses based on your zip code and family size, you can refer to the US Trustee website for local and national standards: http://www.justice.gov/ust/eo/bapcpa...anstesting.htm

4) If your income is dropping, it may make sense to wait a few months to file if it means the difference between filing a Chap 7 and Chap 13. If you will file a Chap 13 anyway, it shouldn't make a difference. It is your projected income and expenses over the life of your plan that determines your Chap 13 plan payment.

5) I have nothing to add to what Keepsmiling said.

Make sure you find a good attorney who will fight for the allowance of your job-related expenses.

[moe]

Thank you so much both of you.

Keep smiling I am expecting a baby. So this is why I am back here because the situation has not raised its ugly head again. We paid our credit cards partly by having people live in our house with us. Now that I have a baby this will not work. I cook for them. (Luckily, I don't have to do their laundry.) Anyway, it's pretty labor intensive and I don't think it's going to work out so well with a crying baby in the house.

Hub cannot file because of his job. He may lose his job, he works in financial services and cannot take the risk it would pose for him getting another job. I realize there are laws against it but they do run credit checks on you when you apply for positions in this field.

It is very unlikely to me we would qualify for a 7. We are $40,000 over median income for our area. (This is without my overtime and without the income from the people living in the house which we always declare on our taxes.)

We have a lot of allowable expenses, yes. So I will definitely do a means test. But I am pretty sure it is a Chapter 13 situation.

I'm assuming no one will question why our income dropped due to my having a baby from one year to the next. If they went back far enough, they could see our paltry income we had that drove us into this situation--but they probably don't go back so far, do they?

I did talk to a lawyer in the past and I will seek another lawyer but it would help to understand things first. My failure to understand the first time really led me to make a bad decision and I don't want to do that again.

It is a tough situation because I'm in the situation where if I work overtime and rent out rooms in my house I can pay my credit cards. But now I am going to have a baby this is not going to work anymore. But I have good credit and have been paying on time every month.

I obviously have to stop the overtime before I file but this is happening naturally. I had to quit one job simply because I could not physically handle it while I am 7 months pregnant. With an infant, it's just not feasible to work all the time. Also it is bad for the infant to never see either of its parents. So there will have to be time before I file anyway.

So here's a question: I have TONS AND TONS of questions. So please tell me not to keep bugging everyone if it is inappropriate to ask these questions here.

E.g.,

(1) Do you just declare the standard IRS amounts of food and so on on your means test? Or do you have to document that is how much you actually spend on groceries?

(2) Do they take account of actual medical expenses or just give you an allowance?

(3) Is there a place I can find out what is allowed on my husband's marital adjustment?

(4) Do we have to contribute only the minimum for retirement on our means test? Or can we contribute more to retirement. We have had low income for many years and need to catch up a little.

(5) Is there some way to find out how much we have to pay back BEFORE declaring? I don't want to do this if I will be paying some huge amount every month for 5 years and barely managing. I realize that is sort of how it is now but it scares me to go into financial freefall if I can't pay the trustee somehow.

(6) What if there is some huge house or medical or other expense? What do you do?

[LadyInTheRed]

You get all national and local standards as expenses on the means test whether or not you spend that much.

Don't focus so much on the means test in connection with a Chap 13. The plan payment is usually determined by Schedules I and J which are forward looking. Your medical expenses, and all other necessary expenses, will be allowed as long as you can document any that are out of the ordinary if the trustee asks or files an objection. If your income decreases because you will no longer have rental income or overtime, that will be reflected on Schedule I and explained if questions arise.

The marital adjustment is whatever portion of your husband's income he does not contribute to the household, if anything. If your husband pays spousal or child support, that would be allowed. At least one person included a spouse's gambling money, but I don't remember if that was successful. If the trustee or a creditor objects, you will have to provide documentation and convince the objecting party or the judge that the adjustment is appropriate. A local attorney should have an idea of what will fly in your local court.

What is allowed for contributions to retirement plans depends on the status of the law in your circuit, procedures in your local court and whether your trustee or a creditor objects. If you were in the 9th circuit, contributions would not be allowed. But, that is not the case in other circuits.

A good attorney will draft a budget and a plan that is liveable. But, a good trustee will make sure you pay all of your disposible income to the plan. So, if everybody is doing their job and you are proactive in communicating any concerns to your attorney, you should end up with a plan that is tight but affordable. Some attorneys will estimate your plan payment during a consultation. Some will charge to estimate the payment, but credit the the amount to the fee if you file. Others won't give you an estimate until you pay the fee. In any case, you will not know for sure what the exact payment will be until your plan is confirmed. But, if you have a good attorney who is experienced in your court, they should have a pretty good idea.

With a good plan prepared by a good attorney and careful budgeting on your part, there will be enough room in your plan to save for unexpected expenses. If something huge comes up that you can't handle, you will contact your attorney who will advice you on how to deal with the situation. Depending on the circumstances, possibilities include a forebearance in plan payments while you pay the expense, modification of your plan to lower your payment or conversion to a Chap 7.

Be sure to consult with 2 or 3 lawyers before deciding on one.

[keepsmiling]

You should have some indication of a ballpark payment amount once you get an idea of your dmi. Then you will tweak it and fine tune it and we can help. Also when the baby comes along (congratulations btw) your allowances will increase.
You shouldn't wind up paying more than you are currently paying now in minimums, and at least an end will be in sight!
How much do you owe, and what's your equity situation?

[keepsmiling]

ps... I didn't think professors got overtime?
Also... you are going to want to wait to file. You're going to want to stop with the OT and the boarders. They will only increase your payments.
Also... what's the situation with you and hubby's debt? Is everything separate? House in both names?

Could be it's time to stop making your min payments, depending on some of those details.

[LadyInTheRed]

Also... you are going to want to wait to file. You're going to want to stop with the OT and the boarders. They will only increase your payments.

Yes, moe, you should stop the overtime and boarders before filing. You should also wait until after the baby is born. But, just to make sure there is no misunderestanding, assuming it will not help you qualify for a 7, should not need to wait for the 6 month look back income to decrease. As long as you have a decent attorney and can document that you no longer have overtime or boarders, the payment should be based on the new lower income. This is an excellent issue to bring up with attorneys at consultations. If after your overtime has stopped and you have given notice to your boarders, an attorney says that you have to wait to file to keep your Chap 13 payment down, find another attorney.

[moe]

THANK YOU SO MUCH LADY IN RED AND KEEP SMILING

You are wonderful--I am going to continue to blather on. Please forgive me!!!!

I will keep working on these issues and then come back and have more interesting things to say.

YOU ARE THE BEST!


Keep Smiling I don't get overtime. I work a second job. But that's not feasible now.

I have very little equity. I really have nothing of any value--my husband has used cars in his name about 10 years old each, I may a tiny bit of equity in my house now that my mortgage is not under water (that my state would let me keep under Chapter 7.) So even if I declared Chapter 7, there'd be nothing to lose. I don't even have a TV that works. (I do own a laptop and a desktop computer that I use for work.).

Complicating this is we own a two family house and one part would be considered rental property I guess...We don't have equity in that either.

For one person, my income is about 20,000 over the median income. But of course, I have a kid and another on the way. That doesn't seem to affect things much with median income. My husband makes about $5,000 over the median income.

Then, this is complicated by the fact I own a two family house. Somehow when I do the means test this seems to throw off my income in a big way even though basically the rent the other person pays is all going to the mortgage (I may have slight equity now that housing prices have stabilized where we live.)

I owe about $45,000 in credit card debt. I try to pay it down and try to pay it down and the amount never changes. My husband was unemployed in the past, we got into debt to keep our house and then we never got out. The debt stays virtually the same no matter what we do. I know it must have something to do with my inability to manage money well? One thing I've noticed is that a very large part of it is due to unforseen emergencies--just things come up like the car breaks down, the house has an issue, etc. If we ever save, the savings always disappears to cover things like this.


For example, my daughter needs orthodontia. Really bad, not just cosmetic. Her adult teeth do not come in. They do not occlude. She has a severe underbite. In fact we were told she would lose all her front teeth if we did not get braces. These cost $10,000!!!! Of course, you would think this is medical necessity but if an orthodontist is required to fix this issue (and we already tried pulling baby teeth, that didn't work) then it is not covered by insurance.

These things seem to be why bankruptcy is so scary to me! There is never a time when something does not arise costing thousands of dollars. Car breaks down. House needs repairs. Kid needs medical care. I can't imagine 5 years going by where we did not have a number of such events.

Lady in Red I guess I thought it made sense to focus on the means test just to know what they would consider leftover disposable income and to figure out whether I could in the off chance file for a 7.

I don't think I would be able to file for a 7. I wanted to understand what they would say my disposable income is so that I would have some mental picture of what will happen in the future and whether it is feasible.

I am soooo confused about what my husband 'contributes.' We just throw our money into the same pot. But I make more. So he probably contributes slightly less than half because he makes less. Anyway, I will try to keep track of this or figure it out somehow.

Should we separate out our incomes into two different checking accounts and all this? I guess we will have to since I will have this black mark on my record and I will not have any overdraft credit or anything like this.

Also, I thought when I went to the attorney then they would make me figure out my expenses anyway to do the means test.

Another thing is just the psychological stress-because I am dreading the effect on my kid. So I would like to know if the things she does like lessons or the musical instrument we rent or whatnot will be counted. Many of the things we do for her are so helpful with her ADHD. They are not super expensive and some are medical expenses and some are more to help with focus and executive function.

If the amount we have to pay is the amount we pay on minimums now then we aren't going to be able to manage the plan because I work a second job to pay the minimums. Our daycare expenses are going to go up so much with the baby. It will have to be less than what we pay now if it is going to be possible for us to pay it monthly.

I think I really must wait 6 months to file. I don't want to file now anyway. It's just going to be crazy with this baby and everything. I don't want to be super stressed out right after the baby is born. I definitely can't do it for a little while anyway.

Maybe I should say that my main reason for filing is that I don't see how we could EVER EVER EVER get out of debt. I just don't see it. I did all these things for years of working extra and renting out rooms and with my interest rates it is impossible. I will never be able to send my kids to college at this rate. This keeps me up at night.

But is that a bad reason for filing? It's been many years now with this exact same debt, nothing I seem to do ever gets us out of debt. Now we have additional circumstances that make it even more unlikely.

I see a trainwreck headed our way because of the daycare expenses plus my more limited ability to work with an infant. So that is another main issue.

[woeisme]

Hi Moe, I don't know that I can answer many of your questions, but I had the same fears going into my CH 13. And yes, lots of life events have come up in the past 5 years of my BK (I've finished paying it off and am waiting for the review and discharge at the moment). While in my CH 13 one of my older cars caught on fire and was toast, and my teenaged son drove the other into a tree!) My husband blew his back out and had to go on disability. During one 6-month period the furnace broke down twice, the fridge died, and the dryer died. We've also had the central air need major repair, had an electrical wiring problem in the house, and plumbing problems. Miraculously, we survived every one of these (and the many more that would be just too depressing to enumerate here!) When hubby went on disability the trustee gave us a 3-month forbearance on payments while we figured out what was going to happen with his job, then gave us a huge break on our payback amount once the decline in income became permanent. He let us keep our tax refunds, and I picked up a few overloads (I'm also a college prof!) when they came available and somehow the little windfalls always seemed to be timed to save our butts when the rainy days hit. Right now the only debt we have is our mortgage and student loans, and 2 more car payments for the vehicle we got to replace the ones that died. It seems so scary, but so was the debt load we were carrying (about 90K worth of credit and medical bills) and I know we wouldn't have gotten it paid off without the CH 13. Best of luck, just wanted to let you know that we were in a similar situation in 2007 when we pulled the CH 13 trigger, and while it wasn't all rainbows and unicorns, it sure beat the life we were leading before!

[LadyInTheRed]

Your household size should include your husband and your kids. So, if you wait until the baby is born, your household size for the means test is 4.

The orthodontist expenses should be divided by 60 (assuming a 60 month Chap 13) and included as an expense.

I don't mean to discourage you from playing with the means test for purposes of determining whether you qualify for a 7. But, for determining your Chap 13 payment, use your actual necessary expenses, with the local and national standards as a guide in deciding what will be considered reasonable and what you may need to provide documentation of.

It sounds like your husband contributes all of his income to the household. But you should discuss that further with an attorney.

An attorney will ask you for a list of your expenses. They are what they are. There really isn't much to figure out. List exactly what your actual expenses are. The attorney will complete the means test, most of which has nothing to do with your actual expenses. He will then prepare Schedule J based on your list of expenses, making adjustments if necessary. You will have the opportunity to go over Schedule J and discuss any issues with your attorney to make sure all necessary and reasonable expenses are included so your plan is liveable.

Your daughter's medical expenses should not be an issue as long as you have documentation. You may also be able to include at least some of her educational expenses. If the extra curricular activities are not a lot of money, they can be included in recreation and entertainment. If you aren't allowed enough for recreation and entertaiment, you cut other things in your budget. Once your plan is confirmed, nobody will be checking to make sure you follow the budget you submit in your petition.

Your plan payment is in no way dependent on what you currently pay on minimum payments. My plan payment is about half what I paid on minimums. That is the beauty of a Chap 13. You pay what you can afford, not what the creditors want you to pay. But, sometimes you do have to make sacrifices and give up things that aren't considered necessary. It may be difficult, but it is a great 5-year budgeting lesson that will help you learn to live without using credit.

Maybe I should say that my main reason for filing is that I don't see how we could EVER EVER EVER get out of debt. I just don't see it. I did all these things for years of working extra and renting out rooms and with my interest rates it is impossible. I will never be able to send my kids to college at this rate. This keeps me up at night.

But is that a bad reason for filing? It's been many years now with this exact same debt, nothing I seem to do ever gets us out of debt. Now we have additional circumstances that make it even more unlikely.

I see a trainwreck headed our way because of the daycare expenses plus my more limited ability to work with an infant. So that is another main issue

That is not a bad reason to file. One common rule of thumb is that if you can't pay off your debt within 5 years, you should file BK. There is nothing wrong with filing BK to prevent a future trainwreck. I was still able to make my minimum payments when I filed. But, because of factors that were about to change, I knew that wasn't going to last. I think many of us are bankrupt before we realize it. I wish I had realized I was bankrupt before taking out a $10K 401k loan to pay of credit card debt a year before I filed. But, at least I didn't wait until I did further damage than I did. At least I'm paying myself back for that mistake and getting a little interest. Those of us who are fortunate enough to see what's coming are better able to file BK on our own terms.

I'm confused about your home/rental. Are they two separate properties? Or is it one property with two units?

You really should start making appointments for consultations with bankruptcy attorneys. Getting professional advice from somebody who can look at your entire situation can really help you invision your BK. You really need to make sure you don't qualify for a Chap 7. Being over median does not mean you don't qualify. Many BKforum members have been further over median than you are and received a Chap 7 discharge. If you can't qualify for a 7, meeting with attorneys will allow you to find out how your various specific issues might be handled in your court. With the advice of an attorney, you will be able to plan your bankruptcy so you will be in the best possible position, whether you file in 3 months or 6.

[AngelinaCat]

Hi Lady. It sounds like moe has a duplex.

Hi moe. It sounds like you are in capable hands here with the advice you have gotten so far. Congratulations on the new addition to the family!

[moe]

Thank you woeisme. Love your user name. In a way, the status quo was OK for us because even if it was labor intensive, we could pay our bills every month and we are frugal anyway. So I guess I dread leaving status quo. But a baby will always upend status quo!

Lady in Red

Since expenses are backward looking and I have to document but I have prospective expenses so I guess I better be careful to do that.

I won't have daycare expenses for awhile as my husband and I are using up leave for back to back parental leave. I am still shopping around for orthodontists since there seems to be some price difference between them.

I will have documentation of the other things though.

Maybe this is why I am not good with money! I don't actually know all my expenses. When we do pretax for medical it is amazing but we always seem to go over the pretax for medical. We already go over the $5,000 pretax for childcare with one child in school so I sweat bullets thinking about how much the next child is going to be. I never kept track of medical expenses or know exactly how much they are. Probably about $250-$300 a month. I assume I have to do that now.

The loss of privacy makes me uncomfortable since some medical care is personal and I have to show the bills.

My house is attached. There are no fixer uppers in our town that are not two family houses. Only condos which are rehabbed and therefore more expensive. Of course, we never did fix her up!!

It's funny because I did talk to a bk attorney a few years ago and she urged me to sell my house (which was not possible in the downturn) or ditch my underwater mortgage and I am surprised but she was 100% wrong. Rents skyrocketed in my city since I bought my house. I'd be paying more as a renter even if you include maintenance. Then I found a way I could rent out rooms in my house and so I gave up the idea of bankruptcy. But now I have to go back to the idea! Oh, well.

Anyway, I am looking up attorneys now. I don't think I can fit too many office visits in with all my other medical office visits. I am due to give birth really soon.

[moe]

Thank you Angelina Cat!!! It is pretty darn exciting!!!

Financially I am having heart attacks of course. The BABY GEAR part is amazing--I got everything the baby needs for next to nothing from listserves of parents in my area. People are dying to get rid of baby stuff and I have so many cute things now. I'm not having a shower but I think I don't need one at this point.

So far I have not put one foot into a retail store and yet my kid will want for nothing. I feel like I should have my own bargain shopper TV show. So I can (kind of!) relax until the daycare bills hit.

[ValleYum]

<snip>
Since expenses are backward looking and I have to document but I have prospective expenses so I guess I better be careful to do that.

Your expenses for your schedule J (not the means test) are forward looking now since the Lanning Decision.

<snip>
I won't have daycare expenses for awhile as my husband and I are using up leave for back to back parental leave.

You have proof for your older child's daycare and you know it will likely drastically increase maybe even double (infant/toddler care is typically higher than preschoolers in my experiences) this should give you and your attorney a good idea of how much to budget for in the upcoming years of your plan.

I am still shopping around for orthodontists since there seems to be some price difference between them.

Once you decide, have the office manager print you out a "Treatment Plan". That way you will have a dollar figure (proof if needed) of your expense for the orthodontics that you can divide by 60 to get your monthly payment amount. If the trustee even questioned the need for braces, I am sure your dentist could provide a statement of the necessity for this treatment.

<snip>
I never kept track of medical expenses or know exactly how much they are. Probably about $250-$300 a month. I assume I have to do that now.
The loss of privacy makes me uncomfortable since some medical care is personal and I have to show the bills.

I used my online-banking 'checkbook' and figured out my expenses. You could also ask your doctors/pharmacist/dentist for your bills from the first of the year (6 months). I was able to claim all of my expenses (like $350+ per month on top of the $60 allowance) and the trustee never asked for bills. Even if they did, please try not to worry about this because, trust me, they have seen it all and typically don't seem to be judgmental.

<snip>
Anyway, I am looking up attorneys now. I don't think I can fit too many office visits in with all my other medical office visits. I am due to give birth really soon.

Let the folks at the offices know you are expecting a baby soon - offer to send your info to them via email or fax and possibly have a phone consultation. You don't know if they can if you don't ask!

How are your vehicle(s)? In good shape? If not, you may want to consider a new car in your name to ensure it gets through the length of your plan (maintenance wise), and since the car is secured - it should be paid off in a 5 year Chapter 13 and will lessen the amount paid to unsecured creditors.

If you have a rental (duplex), remember to include your expenses for the unit's maintenance, repairs and turnover in your expenses!

You seem to be in really good hands here!! I was just adding in a little reassurance and a few thoughts I had.

Happy baby and best of luck on all of this!!