19 weeks until we can file

[Chrysalis]

With all of the weird things that happened with my husband's income in the months of January & February... It looks like the soonest we'll be able to file is September. It's too bad this calculation has to work this way ~ I mean, I understand why they have to have a system (and I'm glad they look at 6 months instead of a prior year tax return or something) -- but I think those "oddball" things, those things you cannot depend on, or things that only happen once, should just not factor in. Sadly, no one asked my opinion on the current bankruptcy laws ;) and so ~ this leaves us with about 19 weeks to make the best choices we can while we prepare for filing.

I still have some questions. We still have some big decisions to make.

I was thinking today: Clearly I haven't been great with financial decisions so far (even though I used to think I was!) ... So I'd better continue to consult my friends here on this forum before I do anything else that's really dumb. I hope you'll all be here ~ can't tell you how much I appreciate the support!

[justbroke]

These laws were tightened in 2005 as part of the BAPCPA. It was specifically to deal with serial filers and those that "timed" things so that they looked "good" on the superficial calculations. That was all replaced by, what even some bankruptcy judges call, a completely superficial test based on past income which, in many cases, does not reflect a debtor's actual circumstance at the time of filing or into the future. Until the Lanning decision went to the Supreme Court (SCOTUS) the bankruptcy courts were each interpreting the impact of the "arbitrary bright line" Means Test and how Schedule I and J impacted what the Means Test revealed.

Some people will still file when their "arbitrary" Means Test does not reflect reality or that they had a one time event. However, it's usually best to just let the one-time event age past the Means Test's 6-month lookback.

Keep asking questions. You actually help many people that only read the forum, and responses, looking for answers to similar or the same questions!

[Chrysalis]

Thanks, jb.

In our case, the 6 months from March - August will truly, accurately give a picture of what his income "should" look like from now on. We had come to rely on bonuses which may or may not come, as well as what I guess most would describe as "overtime" -- but for us it really means being on-call forever and ever and ever and having no real family life whatsoever. We've been living this way for so long, as you know it has taken awhile for us to resign ourselves to the fact that it's just not working, no matter how hard we try. It has been a huge adjustment in our thinking and lifestyle, for sure. But we're doing it. And it's been good.

I will keep talking here because I need to... It helps process. I'm glad to know that some questions may help others, too. I know people are out there reading and maybe never responding. That's ok. If anything I say helps even one person, then I'm glad I'm here and posting for that reason, too.

We are officially at the point where we will have to start cashing in the kids' whole life policies and spending their savings accounts. I haven't done it yet -- but we're there. It's a very strange and humbling place to be.

We had a very nice tax refund (got back some tuition credit since I'm back in college now) ... Have continued to pay all of our bills. Minimums on credit cards are crazy, and sickening, but I'm not ready to stop paying them just yet. It's too long before we can actually file. Plus we haven't decided what we are going to do about our vehicles. We owe more on both of them than they are worth -- and the payments are hefty -- but they are newer, and reliable. We've talked of trying to sell the truck on Craigslist (and MAY be able to) -- but then I don't know what we will replace it with. Don't want our credit destroyed, just yet.

[kberly69]

I need to preface what I say with a giant caveat- I am by no means any kind of expert or even very knowledgeable of anything BK related other than my own experience.
So, maybe someone who knows more than I can jump in here.... What would be the advantage in continuing to pay the credit card bills? I totally understand the sense of doing "what's right" but you already know you are going to file and that you cannot afford to pay them. I know it takes months for the process to unfold until it gets to the point of a judgment. How long? I don't know, but again, someone here probably does. In my case, I stopped paying literally years before I was able/ready to file. I certainly don't recommend that- I believe I simply got lucky that there were no judgments while my debt got handed down through strings of collection agencies. My situation began with a divorce and I called my creditors, closed my cards, and made arrangement with them for payment. It quickly got to the point that I couldn't pay those and stopped.
Less than five months doesn't seem like very long to me (again, someone correct me if I'm wrong) and it would give you a little breathing room.
And yes, keep posting! I was wondering how you were doing And, keep reminding yourself that there IS life after BK and it is much more relaxed and happy.

[Chrysalis]

kberly, I am glad to hear from you -- thanks!

My thought process right now is this: We have two "newer" (we bought them new) vehicles with killer interest rates. 2.8% for seven years on the truck, 2.5% for six years on the car. If I stop paying cards RIGHT NOW, before we have decided what the heck we are doing about vehicles -- our (currently "perfect") credit is going to tank.

That's just a huge step to take. I am open to anyone's thoughts. But that's where we're at right now.

If the travel trailer is going to be surrendered (which we probably should do, but again, a hard decision to make with a payment of only $167 -- and yes I know they may not "let" us keep paying on it) -- then we don't "need" the truck. We could get a different family vehicle of some kind, I just don't know what. If we trade it in, we are gonna take a hit. If we could sell it outright for exactly what we owe, that would be great. But again, that involves needing to go and get a different vehicle loan. I'm not sure what to do and we just haven't been able to decide yet.

If it sounds like I am living in denial -- I assure you, I'm not. I see the numbers in black & white every time I look at the spreadsheets. I really do know how bad it is. The travel trailer would be kept more for FUTURE travel & because we really do use it as extra living space! Another toilet. Lol. I am sitting in the trailer right now doing work for college. It's the only place I can get away from the chaos in the house. But we can't afford to travel -- now, OR post-bk. Just can't.

[Chrysalis]

Now that I've thought about this for a few more minutes, I just wanted to say the only place where the "right thing" comes into my thoughts is if we continue to use the cards, knowing we are going to file, but also knowing that I intend to keep paying minimums. In the past few months, since we got our tax refund, we've only charged gas one time (last week, before payday), groceries at Costco because we didn't have enough cash with us and they only take visa, and today I charged the kids' school lunches because we haven't cashed in their life insurance yet & I haven't brought myself to touch their lifelong savings. I know I am going to have to. I just haven't.

We charged clothes & shoes on kohl's to get the discounts, but I've paid that off right away.

In evaluating my thoughts about your post, it doesn't really come down to the right thing at all. I think I would put it in this order:

1). It's like jumping off a cliff, having no idea what's at the bottom.

2). We may still need to get auto loan(s).

3). We've used them a few times recently.

4). I don't want to have to deal with the phone calls. Yep. There's that.

[Chrysalis]

There. I sent our insurance agent an email and let him know these forms will be in the mail tomorrow, to cash in the kids' life insurance policies. We signed them in February. This sucks.

My husband and I have term life insurance through Primerica that we bought years ago, when a co-worker was an agent for them. He has long since disappeared ~ leaving us with no Primerica agent. I am going to get in touch with a local guy, and see if we can add the children on as a "rider" somehow, as suggested by leonel.

[LadyInTheRed]

Hi Chrysalis.

You say you want to start making good financial decisions. Now is the time to start. Cashing your children's life insurance policies and using their savings doesn't sound like a good financial decision when you know you will file BK and are still making payments on credit cards.

You need to decide now what you are going to do with the cars and travel trailer. If you stopped paying on credit card debt now, could you afford those payments and pay your living expenses without using credit cards? If not, you need to lower those payments.

Re the trailer, the question you should ask is not whether the trustee will allow the expense, it is whether you can exempt any equity you have in it and whether you can afford to keep it in the long run. If it is secured debt, it will be allowed on the means test. But, the trustee could look at your schedules I&J and say that without that expense, you would have enough DMI to pay debt in a Chap 13. Your necessary expenses on schedules I/J and what may cause the trustee to object will not change if you get rid of the trailer. If you have equity in the trailer that you can't exempt and will have to give it up anyway, you might as well stop making payments as soon as you make any car purchase you need to make.

If you need to liquidate assets that you can't exempt in Chap 7, that's fine. But, don't use that money to make credit card payments.

To deal with the phone calls, get a Google Voice number and inform your creditors of the new number.

Instead off filling out insurance forms, sit down and do the math and decide what vehicles you can afford to keep. Sell what you need to sell, buy what you need to buy, stop throwing money away paying credit cards and stop relying on them to pay your living expenses.

[Chrysalis]

You're right, Lady. I know it. This is why I'm posting here. I appreciate all of you.

There is NO equity in the travel trailer -- it is in the same position as our cars: We owe more than we could sell it for. If we could have sold it and avoided having to surrender, we probably would have done that by now -- not because we don't want the trailer, but because I'd rather sell it and pay our loan than to have them come and get it.

The insurance forms were already filled out ~ it was just a matter of deciding to put them in the mail. I don't feel right about it -- but we have no choice at this point. I don't feel right about using the credit cards anymore, either -- whether we are making payments or not. I've got a conscience that just doesn't quit.

I am not familiar with a Google Voice number -- I will have to look into that. Thanks!

I've done the math and it's going to be tight, regardless. Tight is what we clearly need -- since we've run amok with credit for all of our 20 years together. It's time to face reality. What payments are going to be part of that reality is the big decision. We have discussions, but it's here and there with a million things in-between. I have been thinking that we'd tackle this vehicle issue when I am done with classes in the second week of May. I am down to crunch-time with school -- that doesn't help, but is essential to our future, as well.

Thanks again for your advice. I will be thinking about all of this and will discuss with my husband again soon.

[LadyInTheRed]

I've got a conscience that just doesn't quit.

Please stop feeling guilty about not paying debt. Your creditors don't care about you. They are in the business of taking risks to make money. The more risky loans they make, the more money they make. The credit industry works hard to make people feel like they have to do everything possible to pay off debt even if they work the rest of their lives to make minimum payments on credit cards. After reading the above statement, I wondered if it was you who said members of a church support group were advising you to avoid BK at all costs. I checked and not only was that not you, but you gave good advice in that thread about debt and morality. So, I know I'm not telling you anything you don't know. It is just a reminder for your concience, that the right thing to do is what is right for your family: Put the bad decisions behind you, do what makes sense to repair the damage and what is needed to make sure all of your financial decisions from now on are the best ones you can make.

Yes, focus on doing your best in school. The financial decisions will wait 2 or 3 weeks. I suggest that you and your husband make an appointment to sit down alone together and discuss the hard decisions you need to make. The unpleasant conversations tend to be the ones that are easy to put off when there are a million other things in-between.

[Chrysalis]

Thanks again, Lady. I won't lose a single bit of sleep over filing on these credit cards -- I truly won't. We have experienced so many things... them raising our credit limits after I've called and taken the time to ask them to lower them, for example. We haven't paid anything late and we haven't had any fees, but we have watched interest rates gradually rise and we have felt the pinch of the nice balance-transfer offers no longer coming. They send you "10.99% until paid in full" at a time when they can SEE you will take it, because it's the best you can get. They are predatory, no doubt about it. I'm not playing the victim -- I have a degree in business and a background in accounting. I know numbers in black and white. We did this, and I take full responsibility for it. But they make it way too easy to get in over your heads when emotions are running high, you've got a family to care for, and you're working your butt off just to make ends meet. I know that these same people will not lose a bit of sleep over our inability to pay. I also know that they will try to make life very uncomfortable until we are able to file.

The "conscience" part comes in because I find it very difficult to keep paying them AND stop using them completely, especially now that the tax refund has run out. For 6-7 months now, I have been examining every purchase we make (on credit or otherwise) and wondering, will this be considered a luxury? Will we be questioned about this? I've been accused of overthinking things... and I likely am. That's more what I meant. If I am under the microscope, I want to be able to confidently say that no we did NOT commit fraud, no we did NOT go out and run up these charge cards, knowing we were going to file. I would lose sleep and feel guilty if I were knowingly doing something that I feel is just wrong.

Yes, when I am done with these classes I will have a few weeks until my summer class begins. We have a lot to do in those few weeks. If we are going to do anything different with the vehicles, it will have to be in that timeframe. Thanks again for being here!

[Chrysalis]

I've been keeping pretty good spreadsheets of our expenses each month, while we are "trying" to make better choices and scale back... whatever that means. It's hard to scale back when you don't feel like you are living extravagantly in the first place. We've made small changes here and there, I guess. Like I said, I've been questioning pretty much every purchase.

The reality on my spreadsheets right now is that POST-bk, without any of our unsecured debt payments, without the trailer, and without the kids' life insurance payment -- we would still be coming up about $1800 short each month. Based on our current spending. If none of us ever needed to eat, we'd be set.

[Chrysalis]

I made an appointment with another attorney ~ someone right down the street from our house. I found their bankruptcy site a few months ago, and we have been wanting to consult with him and get some more questions answered before we make any big moves.

Our insurance guy had to send us new forms, since the ones we had were signed and witnessed in February. So we haven't cashed in the kids' life insurance just yet.

This guy said he wants to see bank statements from the kids' savings, and that he "might" be able to exempt it -- but "no promises". I am not hopeful on this one at all. They can look back for YEARS and see that all we've done is put their money in there for Christmases and birthdays, but they will also see that we've taken out $400 or $500 when we needed cash to go to Costco -- and then paid it right back on payday. One attorney told us, "that's where they'll get you". And he's probably right. No one cares that it's the kids' money -- it's in our names, we have total access to it, and they don't.

[Chrysalis]

I just filled out nine pages of paperwork for this appointment with a new attorney tomorrow. I am beginning to wonder if a Chapter 13 may be a better choice for us. I have never wanted to consider this, as five years of having someone else in charge of your finances sounds so long. A lot can happen in five years!

Are you allowed to get student loans during a Chapter 13? I have to be able to finish my school.

[bcohen]

I have been following this thread, but have not posted anything until now. My take is that whether it is Chapter 7, or Chapter 13, bankruptcy is probably not for you. The reason is because it sounds like your income is too low to cover your living expenses, so you must necessarily rely on credit in order to get by. Even discharging 100% of your existing debts, and surrendering all of your secured collateral will not help if you don't have sufficient income to meet your living expenses!