New to the forum so I wanted to introduce

[veloguy]

myself and ask a quick question...

Found you folks last night as I was online doing some research. My wife and I have finally decided this week to persue Ch. 7. It's been 4 years of 'one step forward, two steps back' w/ increasing debt b/c of several job changes (some not so good) on my part, move to different state, loss of wifes income so she could stay home w/ the kids, etc. Icing on the cake was my wife finally letting me know about a month ago that the business she has been trying to get off the ground for the last year and half has put her under $67K in unsecured debt (who gives a CC to someone w/ no job?!). Add that to my debt and we're done financially.

I've compiled a list of local attorneys that I'll start contacting tomorrow. Question I had this evening was, after going through the means test last night and looking at the median income for our state, I come in at about $250 above for monthly income. Then, once I go through and plug in the IRS deductions for expenses, it appears to put me well below. Obviously I'll be talking to an attorney, but does anyone have a sense of whether I'm SOL for filing Ch. 7 and will be pushed into Ch. 13? Does a Judge (or arbitrator?) typically just deny Ch. 7 outright if you come in a little bit above the monthly median income?

If anyone was willing to provide some insight it would be appreciated. Thanks in advance for your help.

[PaKettle]

As I understand it there are extenuating circumstances in which some people qualify for Ch. 7 even if they come in over the median income. Someone here will correct me if I'm wrong, but that is what I think I read here. (Do a search on Means Test here, maybe...?)

I do know this from what I have read:
Do not take no for an answer from just one or two attorneys. I know that some people have been told they are not eligible by some attorneys only to successfully file chapter 7 with another attorney. If you talk to 4 or 5 and they all say no to chapter 7 then you may have to take their word, but don't quit at just the first one or two no's. Some less-than-scrupulous attorneys (imagine that!) will want to force you into a Ch. 13 so they can make more money off of you. Try to find ones that are recommended by people who have used them. Lacking that, try getting one from NACBA.com.


For your consultations, give as much accurate info as you can, especially how many unsecured credit cards you owe and how much money (this part doesn't have to be exact, but the more exact the better), how many RECENT purchases over, say, $300 you've made in the past 3 months and then 6 months, and how many big transfers you've made in the past year or two. These were questions my attorney wanted to know.

Also if you add up all your income for the past 6 months, gross and net, that will help.

Then if you can estimate your monthly expenses for everything that will help too. You can get an idea of which expenses and how much are allowed at the same site where they have the means test income figures. There is a link there that shows expenses allowed for each state. If you can't find it on google, there is a link here in this forum.

Good luck.

I am definitely not an attorney so take this with a grain of salt.

[CATCHMEIFYOUCAN]

Catch 22, if real schedules (I & J) prove you have disposable income of $250, but Median Test proves you are negative, good chance the Trustee will object and the case will be sent to the judge to decide. IF you originally file for Ch7 and it shows you have disposable income, you'll be forced into Ch13. I think its much easier to file for Ch13 and be able to convert to Ch7 if it winds up being that way. This is just from my experience (but I do not have kids and assets - so your case might be a bit different). I just went for a Ch13, just to keep my options open (more or less), also Ch13 does cost more, I'd rather be covered with the cost of a Ch13 than have to be thrown into Ch13 and looking at additional cost.

Just my thoughts, Catchmeifyoucan

[veloguy]

Thanks both of you for the input...

I guess thats what I'm not understanding....

My states median monthy income is $5341.25/month for a family of 4 (me, wife, two kids). My gross average monthly income for the last 6 months is $5583/month. So I have "disposable income" of approx. $250/month? My monthly min. payments for wifes and my CC's alone is $2100, the IRS deduction for mortgage is $1400 (my mortgage payment is $1900), utilites, vehicle (which is necessary for my work), health insurance, fed taxes, etc. If it's the law, I suppose it's a moot argument, but it seems ridiculous that an arbitrator could claim that I have "disposable income" when after all these expenses I'm $2K in the hole each month. Sweet.. I'll be up again tonight till 4am thinking about that....

[CindyLou]

I thought that if over 50 % of the debt was business debt then the they didn't have to take the means test or be under the median for chapter 7?

[JRScott]

We'd have to know a lot more about your situation before we could tell you your chances.

I do agree with the advice that you need to see 4-5 bankruptcy lawyers. Do not just take the first one you meet, that might not be a good deal for you.

Just because you are above the medium income does not mean you cannot file for Chapter 7. It just means you need to complete the entire Means test.

You should obtain copies of the last 3 tax returns you've filed (If you haven't kept copies you'll need to get them from the government....transcripts for federal which are free are fine, the full copies cost money).

You need to get NADA values for your cars. Have your home appraised ( you can guestimate some by looking at similar properties for sale in your area). Make sure to have loan papers readily available for what you owe on these. It is also a good idea to look over them and see if they need any repairs and get estimates on the repairs.

Copies of your utility bills and credit card bills.

Get your paystubs for 6 months, if you are like most folks you don't keep these but your company should be able to provide you with copies. (Its better if you have them though )

You'll need statements from all retirement accounts (don't worry these are protected under the new bankruptcy laws but they do have to be listed)

You'll need copies and statements from all savings/checking/money market accounts including going back at least 6 months. (If you closed any accounts in the last year be prepared to show those statements as well and show where any money went).

If you have transferred property in the last couple of years be ready with all the paperwork.

A lawyer can help you through the means test and give you his opinion. If you have all the above he'll have a better idea of what your situation is and what he can do. Just because your mortgage is above the IRS limits does not mean you can't use the real number, check with the lawyer. Its a question to ask them. (Be ready to document any expense that is unusually high by the IRS standards....in other words mortgage papers..)

If the primary cause of your bankruptcy is business debt, and it is clear it is business debt than you actually don't do the means test. However this is something else to run by the lawyer. More than 50% of the debt must be business debt to count as business.

Good Luck

[CATCHMEIFYOUCAN]

Just a cautionary procedure, IF NEED BE. IF you have any creditors tied to your bank accounts (credit cards/loans) you better close them and open a new account unrelated to you debt before its too late. The creditors can use what they call Cross Collateralization, they can take funds from your account to pay towards other debts owed to them! And I'm not sure how hard it is to open a new account at another bank AFTER you have already filed. There have been several post by members that did not know about this and their funds in their accounts were wiped out! I've only heard of Credit Unions doing this though?

Catchmeifyoucan

[keepmine]

My monthly min. payments for wifes and my CC's alone is $2100,

Are you current on those cards? If so, you're headed for a 13. You won't be allowed to bk unsecured debt and have $2100 of disposable income a month.

[whatamess]

Welcome, greetings and salutations!Youve found a good place. Go through threads, read different stories and see several attornies.
I was going to point out what Keep mine wrote above about that $2100 payment and Catch me wrote about bank accounts. Get the bank accout cleared up NOW if it applies.
Trying to find a way to make $2100 a month dissappear w/o a drastic income change or some other dire circumstance will not be easy. Does anyone need braces? Check out the means test threads to make sure you are calculating everything.
BTW can you cover the equity in your home? Thats a big one in choosing 7 or 13.
GOOD LUCK!!!
WAM

[guzzie]

welcome and good luck.......guzzie

[Dirk Squarejaw]

Trying to find a way to make $2100 a month dissappear w/o a drastic income change or some other dire circumstance will not be easy.

But he also says......

after all these expenses I'm $2K in the hole each month.

If I'm reading this right, if the amounts on the means test are showing him "in the hole" $2k each month and they quit paying $2100/mo to keep the CC's current, then they'd have $100 to spare each month.

[PaKettle]

My monthly min. payments for wifes and my CC's alone is $2100,

Are you current on those cards? If so, you're headed for a 13. You won't be allowed to bk unsecured debt and have $2100 of disposable income a month.

I was in a similar situation as far as amount owed and no missed payments yet all the attorneys I consulted with said I was eligible.

The difference may be that I am under the median income for my state, and my income fluctuates from week to week and the month I stopped paying it had gone down and I never know if it's coming back up or staying down.

So, yes, technically I should have an extra $2k a month to spend, but I really don't.

Part of it is that I had taken out a $5k or so balance transfer 5-6 months ago, that I more or less just let sit in the bank and used it to pay bills and buy things and whatever. My attorney said I should not say this if asked, but I really don't see why - they say on the transfer "come on": "Use this for whatever you want". I used it to spend and pay bills for a few months.

All I know is that it came to a point where I could not pay my bills, I didn't have enough money in the bank to pay them, and still don't, so... I don't see how I would not be eligible for a Ch7. Especially after 4 attorneys told me I am.

[keepmine]

Part of it is that I had taken out a $5k or so balance transfer 5-6 months ago, that I more or less just let sit in the bank and used it to pay bills and buy things and whatever. My attorney said I should not say this if asked, but I really don't see why - they say on the transfer "come on": "Use this for whatever you want". I used it to spend and pay bills for a few months.


Here's the difference in your situation and the OP's.
You are in the "robbing Peter to pay Paul" mode. Once you run out of savings, you're done,
The OP is unclear. His statement was, his minimum payment is $2100/month on the cc debt. If he's not taking cash advances-just paying the bills as they come due, he has a lot of disposable income should he file bk. He won't be allowed to use the payments of debts he'll discharge in bk as an expense.