Help on Means Test

[ConfusedinMN]

Hello All-

I'm in a bad financial situation, and need some help on bankruptcy. I'm going to find some free consultations (any suggestions for Minneapolis, MN?), but I'd like to wrap my head around these bankruptcy provisions as soon as possible to help calm myself down.

I owe ~ $25k in credit card debt, all of which is roughly 3-4yrs old of not being paid due to financial hardship as a result of 9/11 and a job loss. I got bad advice that credit card companies won't do anything, and after 7-10 years you can get them removed due to statute of limitaions...

Fast-forward to today, and I received a notice of judgement for $4600 and an iminent wage garnishment of 25%. I cannot live on that garnishment, and the law firm offered me a slightly less high monthly payment instead. So now I'm thinking about bankruptcy, especially since if one of the other creditors gets a judgement against me, I'd be completely done.

The bad thing is that I just received a big raise to $47k a year (from $37k), which is over the $42.5k means test. I am also married, and my wife makes $20k a year. With that raise, I could figure out a way to pay the judgement payments, but as I mentioned I would be done if something similar happened from another account.

We rent a townhome, and don't have any assets beyond two cars - one old Dodge Neon fully paid off, worth $2-3k, and one 2005 Mazda 3 with barely any money paid off on the loan since the interest is so large in the beginning payments (got it a year ago).

Would I possible qualify for a Chapter 7 still? If not, what can I expect for the Chapter 13 payments to look like after it's done?

Thanks everyone!

edit: between my wife and I, we owe ~ $60k in student loans which couldn't be discharged, but might help the Chapter 7 means test?

[miss puff]

Hi ConfusedinMN. Welcome from another Minnesotan here I am not sure about anything regarding chapter 13 and payments as I am a straight, no asset chapter 7. Do you have children to apply to the means test? That could help out alot. Are you filing jointly with your wife? Not trying to be snoopy or anything, just trying to help on the means test. A good BK attorney from MN is www.hoglundlaw.com. They specialize in it and when we went for a free consult-Keith was his name-they gave us TONS of information that we had no idea about. I would suggest trying them along with a couple other free consults and see who you are comfortable with.

*Now mods, I am not advertising this company, he asked and I simply gave him a referral *

Anyways, good luck, it's a tough road but this is the best place to come for information, venting and just getting through it. I know I probably couldn't have done it without this place.

[lrprn]

Welcome to BKForum, CIMN!

Hello All-
Would I possible qualify for a Chapter 7 still? If not, what can I expect for the Chapter 13 payments to look like after it's done?

edit: between my wife and I, we owe ~ $60k in student loans which couldn't be discharged, but might help the Chapter 7 means test?

Since your income (or if both you and your wife are filing, your incomes together) are above the median for MN ($42,776 for 1 person; $55,338 for 2 persons - see http://www.usdoj.gov/ust/eo/bapcpa/2...come_table.htm ), you'll have to continue on into the mandatory Means Test to the second portion to see if you show disposable income or not and how much. That's the deciding factor between being able to file Ch 7 or having to file Ch 13 instead.

Here's a link to a "practice" means test (be warned, it's worse than doing your taxes!) - http://www.legalconsumer.com/bankrup...means-test.php . Be sure to change the zip code to your own. Remember this form is making a rough guess - you really need a lawyer familiar with what is acceptable for living expenses, etc. in your bankruptcy district to absolutely know where you stand. Complicating matters, there is variation from bk lawyer to bk lawyer, from trustee to trustee, and from bk judge to bk judge in how the poorly written new bankruptcy law that went into effect a year ago is interpreted and how the Means Test forms need to reflect those interpretations - again, a experienced local bk lawyer can help navigate this rough water as well.

Sounds like it's time to make 3-4 appointments with bankruptcy-specialty lawyers in your area to fill in some of these gaps. Most bk lawyers give free half-hour to hour consultations. Take all your questions along with your latest pay stubs, a list of all your assets, all your creditors with the amounts owed to each, and an estimate of all your living expenses over the last 6 mos to a year. You'll learn a lot and be far more knowledgeable about how the bankruptcy law is interpreted in your location and if bankruptcy is the right answer in your situation or not. Good luck - keep us posted on what you decide to do, ok? And again, welcome!

[CATCHMEIFYOUCAN]

Sounds like it's time to make 3-4 appointments with bankruptcy-specialty lawyers in your area to fill in some of these gaps. Most bk lawyers give free half-hour to hour consultations. Take all your questions along with your latest pay stubs, a list of all your assets, all your creditors with the amounts owed to each, and an estimate of all your living expenses over the last 6 mos to a year. You'll learn a lot and be far more knowledgeable about how the bankruptcy law is interpreted in your location and if bankruptcy is the right answer in your situation or not. Good luck - keep us posted on what you decide to do, ok? And again, welcome!

Don't forget you'll need at least 2 years back that you filed taxes, the IRS will send you free transcripts, you can order them over the phone at no cost!

GOOD LUCK, catchmeifyoucan

That means test can be pretty tricky, watch out for schedules I and J ! try to think of as much you can to eat up any disposable income you might have !

[no_it_all]

Would I possible qualify for a Chapter 7 still?

Don't know, but all you have to do is complete the Means Test Calculations and you will find out in a jiffy........More than likely you will have no problem qualifying for a Chapter 7. Good luck

[ConfusedinMN]

Thanks for all the great help guys! I am going to start the means test, but I had two questions:

1) I just received the promotion about 1.5 months ago, so say if I file in two weeks, does that mean that my previous salary of $37k factors in for the first 4 of the 6 month period?

2) I just got married ~ 5 months ago, and all of the debt is from 4+ years ago. Her situation is ok (just 1 CC and student loans), so if I file singlely does the means test still look at both our finances, or just mine? Or is MN a state where you have to file jointly no matter what.

[SinkingFast]

You can file alone. Wife's income would be listed at the start and then deducted out later since she's not filing.

The quicker you file after having an increase in income, the lower your 6 month CMI will be. That's true. Say you had 4 months of the $37K income and 2 months of the $47K income used in the CMI, that would put your annual income at $40,333 for filing purposes. If your original post is correct, you would be below the Median and qualify for a Ch 7.

Even tho you could file soon enough to be below the Median, the Court can consider "Totality of Circumstances", use your new income level in their consideration, and force you to convert to Ch 13.

Definitely visit several attnys and get their take on your situation. You may have enough in car payments, Secured Debt, and Student Loan payments, Priority Debt, that you could qualify for a Ch 7 regardless.

[ConfusedinMN]

One last Means Test question:

In Section 6, line 53 it says "Enter the amount of total non-priority unsecured debt." I assume that this includes Student Loan debt?

[sofarindebt]

Hello, I am another Minnesotan

If you are looking for a good attorney, I used Robert Everhart lawfirm. They are located in Roseville. I also hearn Jack Prescott is good.

Good luck!