Contemplating 7 but confused with means test

[Vonnie]

Hello Everyone,
I'm Vonnie. I've been reading through this forum for a couple days. It's great that we have this tool, and I am excited to get more information and feedback from those of you who have more experience with how bankruptcy works.

So here's my situation. I'll try to keep it fairly simple: Four years ago bought second house, toxic mold. Incurred debt, sold first house. Husband was out of work (6+ mo.) due to car accident. I was preg. at the time and trying to get through school. We were sued in an unrelated circumstance... won countersuit but the amount didn't come close to helping us to recover atty fees. I'm out of school now, not making what I thought I would, husband, after being back and forth with seasonal work, decided to start business. Business not so good, incurred even more debt there.

So that's the basic background of it, vague I know. So, long story short, we've been holding on and holding on, but we are now 100,000+ in debt and the stress is just making it hard for me to stay happy and/or sane, even for my kids' sake.

I recently took a $10,000 cash advanse to help pay the bills (before I had even considered bankruptcy.)

My husband now has a job making 7,000 or so a month. I make 2,000 to 2,500 give or take.

In regard to the means test, with my husband's new job, we seem to be well over, but considering his job is seasonal, who knows how long it will last.

Will we still be able to file 7? I'm so tired of this catch up - fall behind game. I feel like we'll never get this debt paid off.

We have minimal equity. We're in a negative amortization, with mortgage at 2,489 including 2nd, with $1,300 a month being tacked onto the principle.

Just hoping someone can give me some suggestions, feedback, peace of mind. I'm so tired of having nothing for myself or my kids, you know.

Thanks,
V

[Boscoe]

Hi Vonnie.

A good first step to post to this forum....we will do whatever we can to help.

First off, your combined income looks to be around $100k a year, so a chapter 7 will be difficult - you may have to go with the chapter 13 option.

Now, about that mtg loan. Ouch. Not sure what the options are with that much neg amort. There has got to be a way to refinance into something more reasonable, but not sure what that is. Maybe others have some ideas.

You need to speak with a few attorneys to find one you are comfortable with and who can give you good advice on how to proceed.

Good luck and let us know how the attorney meetings go.

[Vonnie]

nnb

[Vonnie]

I've got a meeting with an attorney tomorrow, so I'll let you know.
I forgot to mention that my husband's business was in the negative BIG TIME for the last few months. Shouldn't that make a difference?

[JRScott]

The nature of the debt is in question.

If more than 50% of the debt is non consumer debt then you do not take the means test to file Chapter 7.

If more than 50% of the debt is consumer debt then you do have to take the means test.

On the means test and for the bankruptcy you would take the pay stubs for the last 6 months for each of you and double that. That would determine your 'yearly' income for filing purposes.

Since his work is seasonal you would most likely wish to file when he was in the off season so as to minimize his income report on the filing. (Say if he works April through October each year. Then you'd want to file in March or April since he would have little pay in November, December, January, February or March).

Just because you have to take the means test does not mean you cannot file Chapter 7. However you would have to complete it and if at any step you get to the result check the box that says the presumption does not arise then you are probably a Chapter 7 case. If however the presumption does arise you are going for a Chapter 13.

Talk to several lawyers in your inquiries and mention the mingling of business and consumer debt, and ask what is the best options for you.