Chapter 7

[hrh25]

Its been a while since i was on this board but am at a point where i am getting ready to file (October). I have a few issues that i need to get some kind of clarification on. I have debt thats about $135,000 now with all the late payments etc., i am also well above the med. income for Virginia. I will be the only one filing as all the debt except for mortgage is only under my name.

I make $96,000 and my wife makes $42,000 a year, we have two young children 5.5 and 3.5 years old. I had been trying to do a loan modifcation for the past six months and have been able to cut my mortgage down from $4,500 to $3,600 a month, this includes taxes and insurance. I am hoping loan modifcation will not get void when i file.

The question i have is that i have my ageing parents (almost 80) living with me and we take care of there needs the best we can. My dad does get social security of about $630 a month but hardly enough to cover there medical and i have never asked anything from them. I do not claim them on my taxes and they do not file as they do not earn enough. Will i have to include this as my income even though i do not get or want anything from it?

I am also wondering if i have to put them in as household members and can count there out of pocket medical expence since i pay for it? With the mortgage and including them in household i quilify for chapter 7 easly since this makes us family of six. We have no equity in the house what so ever and would like to keep it.

I also have two cars that are paid off but i think can only get about $16,000 for them. I can only exempt $8,500, so i will have to figure out how to pay the trustee or give the car to them. I was thinking about selling the one i drive since it keeps braking down and is high maintenance and buy something else. Would this be a problem?

The other problem is am currently finishing up my master's and am still getting student loans to pay for it until June 2009. I know they are in deferment but i started to pay them a little. Will it be a problem getting student loan (Federal) with an active bankruptcy? I am thinking since mine will be an asset case unless i can sell the car and get one financed it will take a while to close my case.

I am also sure my case would be looked at carfully since i am well over the med. income and have a huge debt. What should i be looking at before i file to make sure all my tee's are crossed and i's are dotted. Thanks again for your help.

Regards

HRH

[b_girl]

Goodness, sounds like your plate is full to overflowing. I don't have any advice to offer on most of your questions but I'm hoping someone here with more knowledge will. Good luck!

On the issue of your 2 cars, if I were you, I would definitely get rid of one of the cars in order to reduce assets...trade it in for something decent that won't cause you unexpected expenses for the next several years. Do it soon so there's time between the trade in and your 341 and be prepared to explain why you did it just in case the trustee questions your timing. Course your attorney will be able to give you the best advice on this issue.

[Cali]

I was over median and my debt was 162k, and they did look at it closely but no one said anything at the 341.

As for the medical I would think you can count their medical expenses since you pay it.

You would probably have to count their income, because they do live with you.

As for the cars, I would get something more reliable before I filed.

When are you looking at filing?

[hrh25]

Thank you for the reply everyone. There income is from social security and i thought the means test said not to count that? I could be wrong though, i will try to see if i can get a another car quickly.

I was looking to file in October, which is not that far away, the problem is i have already started my crediters that am filing. They were calling me 15 times a day each and even at work. Lawyer told me once you tell them that you are filing thats the date they use and not the date that you actually file.
I just don't want it to seem like am getting more debt even though i know am filing in a few months.

Thanks again for all your reply.

Regards

HRH

[b_girl]

I just don't want it to seem like am getting more debt even though i know am filing in a few months.

Thanks again for all your reply.

Regards

HRH

You sure don't want it to look like your disposing of assets just so the trustee can't get them. That's why you need to do it soon and only get a used, serviceable late model car....nothing new or too fancy. That way, you can truthfully explain that the one you traded was on its last leg and was costing you more to maintain than a newer one would.

[Cali]

I really don't know about social security and using it as income. I am sure your attorney can answer that for you.

And I told my creditors I was filing in March and I didn't file until June.

[danaf]

Have you already done the means test.....are you sure you qualify for a ch 7?

[PoorGrammyinBK7]

I remember my attorney saying social security is about the only income that you CAN exempt from the means test - but I would check with you lawyer as well on that, cause we did not end up doing means test, being non-consumer debt mostly. I would think you could definitely include them as members of the household since they ARE living there and also any additional expenses.

[hrh25]

Thank you very much for the feedback everyone. I did do the means test and yes i pass it and my schedules work out also. I am the only one filing and i know i have to also include my wifes income, i would just hate to have to include my parents social security also since thats the only income they have and have nothing to do with my bankruptcy filing.

I think am going to try to keep the car and just let the trustee take it and do whatever he wants with it. All my numbers line up and am not worried about that, what am worried about is them saying well your mortgage is $3,600 a month, you can get a cheaper place and pay something into chapter 13. I also do not have any equity in the house so it would not make any sense for them to try to sell it. The house is under both my and my wife's name and she is not on y of the other debt.

The other reason i do not want to get another car is because it might look like i knew i was filing and still kept on piling new debt. My other concern is the school loan, i am still in school finishing up my masters and will have another two payments of loan going to the school from education department (Federal Loan) of $13,000 in Januray 2009 and another $13,000 in June 2009. These payments will not become due to until Feburay 2010 since am still in school.

I am worried that if i can not get these loans due to filing bankruptcy i would need to drop out and i will be only 6 months away from garduation at that point. Its a master program so i can not transfer them to another school etc. This was the reason i wanted to get rid of the car so not to make it an assit case because it could drag on forever.

I was hoping to file in September/ October but that would not give me discharge before Januray school loan is due to school. Not sure i can even drag this on that long because i stopped paying CC's back in Septmber of last year. Has anyone gotten student loan while in active bankrupty? If yes how did you handle it and who did you need to talk to, the school or department of education?

Thanks again for everyone response and help.

Regards

HRH

[BK2008]

Itr seems for means test purposes, whether they count social security or not, your parents would be included in your househould headcounts, as you are paying alot of their bills (providing them maybe 50% of their support or so)??

That ball should swing the other way, too.

[deafbroke]

Thank you very much for the feedback everyone. I did do the means test and yes i pass it and my schedules work out also. I am the only one filing and i know i have to also include my wifes income, i would just hate to have to include my parents social security also since thats the only income they have and have nothing to do with my bankruptcy filing.

I think am going to try to keep the car and just let the trustee take it and do whatever he wants with it. All my numbers line up and am not worried about that, what am worried about is them saying well your mortgage is $3,600 a month, you can get a cheaper place and pay something into chapter 13. I also do not have any equity in the house so it would not make any sense for them to try to sell it. The house is under both my and my wife's name and she is not on y of the other debt.

The other reason i do not want to get another car is because it might look like i knew i was filing and still kept on piling new debt. My other concern is the school loan, i am still in school finishing up my masters and will have another two payments of loan going to the school from education department (Federal Loan) of $13,000 in Januray 2009 and another $13,000 in June 2009. These payments will not become due to until Feburay 2010 since am still in school.

I am worried that if i can not get these loans due to filing bankruptcy i would need to drop out and i will be only 6 months away from garduation at that point. Its a master program so i can not transfer them to another school etc. This was the reason i wanted to get rid of the car so not to make it an assit case because it could drag on forever.

I was hoping to file in September/ October but that would not give me discharge before Januray school loan is due to school. Not sure i can even drag this on that long because i stopped paying CC's back in Septmber of last year. Has anyone gotten student loan while in active bankrupty? If yes how did you handle it and who did you need to talk to, the school or department of education?

Thanks again for everyone response and help.

Regards

HRH

First thing. You should check with attorney about exempting the car. Or you can sell it and get something else, use any profits you have for neccessities. Your attorney has or can explained it to you. You might have room under wildcard exemption to keep the car and protect it from trustee. They can't tell you where to live. If you're house payment is $3600 then they have to accept it.
No matter what, DO NOT REAFFIRM THE MORTGAGE! You can still live in the house and make the payments and not reaffirm. If you reaffirm and you lose the house later you will be sued by mortgage company for any money above the sales price of house from foreclosure and you will be liable for it. Reaffirmation only benefits the mortgage company. If your wife has any debts you might want ot consider having her file with you. It would double the wildcard exemption you get allowing you to protect more assets. If she's consider it, try the means test with her debts added on. After bankruptcy or even now I would seriously consider finding a cheaper place to live to help lessen the blow of the student loans otherwise you might have same problems you're having now after your doen with bankruptcy.

[hrh25]

Thanks again for the replies, I do not have enough exemptions to exempt both cars as Virginia has lousy exemptions and the cars are paid off. My wife does not have any debt accept for school loans so there is no reason to have her file with me.

I know my case will be looked at hard but i have most of the documentation and can account for what i spend. It is just a matter of if they will let me use my parents as household members since i do not claim them on taxes and they do not file taxes since the SS income is less then $7,000, this is hardly enough for there own expenses.

I am just wondering if i got rid of the car am sure that would piss them off since i plan on filing in just over 2 months. I worked really hard to get my mortgage loan modified from $4,500 a month to $3,600 a month and i just hope they don't cancel the loan modification once i file. The house is the only thing thats under both my and my wifes name. Both cars are under my name even though my wife helped in paying the car she drives off, since am the only one on the title there is not much i can do but to give it to them or buy it back from them.

Regards

HRH

[hrh25]

Does anyone know if i sold my car and used that money to pay the attorney and some other bills and use whatever is left for a down payment on another car, would this money i recieve from selling the car be used as income?

I might be able to get some where between $6,500 and $7,200 for it. I need to pay lawyer about $2,500 and some for school and other bills and use the rest to put down on a car thats a little cheaper to maintain. I just don't want that ending up as income somehow.

Thanks again.

Regards

HRH

[Help!]

Yes, the proceeds from the sale of the car can be counted as income on the means test. Any money from any source that you receive during that six month period can count as income, regardless of what you spent it on.

In my opinion, I'd be more worried about the size of the mortgage loan payment than anything else if you aren't surrendering the home. If having a successful Ch. 7 is the most important thing to you and you are really opposed to Ch. 13, I'd give some thought to parting with the home and a payment that could be seen as unreasonably excessive. The UST in our district would be screaming presumed abuse if they saw your income, unsecured debt and mortgage payment, especially knowing that you'd be continuing to live in what would be considered an extravagant home after paying nothing to your creditors.

My opinion is that you will need a superstar attorney to avoid presumed abuse in a Ch. 7 case, and you need that superstar attorney's advice as soon as possible.