A little confused about qualifications...

[roxy1334]

My boyfriend is in the processed of being sued by a junk debt buyer and we have discussed filing Chapter 7. He tells me it isn't possible, that he tried 5 years ago to file and he was turned down because of his debt to income ratio.

I have searched all over the net and can't find anything like that at all. He doesn't have any credit cards he is currently paying on. He wants to keep all of these old charge offs from being sold...he has been sued 3 times total (first 2 were small amounts settled out of court). He is constantly afraid of being served and this most recent suit is for a decently large amount he simply cannot afford to pay.

He is about $10,000 below the median income for our area. Does he still have to take a means test? From what I've found online, he doesn't but some sites say that the means test is mandatory. He is living with his mom right now and has no verifiable expenses other than a car payment and cell phone.....he is moving in with me soon and will pay half of the expenses...so how does that factor into all of this?

I am researching as much as I can to make sure this is even doable before we get our hopes up too much about it.....Any help is greatly appreciated!

[FreshLikeADaisy]

Roxy, I think it's quite possible that your bf is eligible for a successful Ch7 being under the median. "Verifiable" expenses is a red herring; what Ch7 is concerned with is actual expenses (schedules) and average expenses (means test). Even if he's cash only he could start saving his receipts today and make his expenses quite verifiable for the purposes of bankruptcy. And while being under the median prevents you from having to complete the means test, you still have to list out all your expenses in the schedules to show that your income really doesn't support your debt.

Many bk attorneys offer free consults. Why not go see 2 or 3 of them just to see what they have to say? Another option is for bf to learn how to fight these suits, as opposed to rolling over for default judgements, if only to buy himself some time while he figures out what he'd like to do. I'm not so sure this is a good moment to have him move in, though. You may want to wait and see how he deals with his finances, and how moving will affect his financial picture going into bankruptcy.

As you are probably aware, the bankruptcy laws have changed since he last tried to file. I'm not at all certain how his "debt to income" ratio would have prevented him from filing under the old law... unless a great portion of his income was going to something he didn't care to disclose. It's all actually pretty straightforward, which is why that statement doesn't really hold a lot of water for me. Turned down by whom? An attorney or the court? I don't want to cast aspersions on your bf, obviously I don't know him, but I honestly don't think you're getting the whole story from him.

In any case, even if he's not eligible for a Ch7, he would probably be so for a Ch13, which would allow him to pay back *some* of these debts, which is only fair if he has a job and can do so. A 13 would allow him to restructure his debt so that it is not crippling, and it would also prevent future lawsuits by creditors if he stuck to his plan and made his payments on time. I'm not hearing that these debts aren't legit, only that he can't pay them, so maybe a 13 really is for him if it'll stop the lawsuits and allow him to change his way of living so that he can rebuild his credit over time.

If you really want to do some research, read through this forum and also think about getting one of the books on Ch7 (one is listed in my sig, the Dummies book is also good) which will explain the basics very understandably. I wish you the best of luck.

[PaKettle]

I would definitely encourage him to have at least 2-3 consultations with attorneys.

See the threads here on how to look for an attorney, there is one recently about what to do to prepare for one's consulations. The more accurate info you go in with (actual gross income for last 6 months, all expenses, debts, credit withdrawals, etc.), the more accurate the attorneys can be in predicting if he qualifies.

Good luck.