Military Benefits as income?

[badfishy]

I'm new to this, so sorry if it's all over the place. I'm in the military and make okay money, my wife has a good job and makes decent pay as well. Problem is we're pretty bad with money and have been living paycheck to paycheck for awhile. Well, now we're splitting up and can't afford two separate households and all of our debt. Now the interesting part...I just did an online means test and basically combined we make too much money to qualify for a Ch 7 living in the same household, but, we're too broke to afford either of us to move out and setup a home. If i didn't have to include my non-taxable military benefits (housing and food) we can do the 7 as same household. Otherwise, I have no idea what to do. Bottom line is, if 13 is our only option it's not much of an option at all. All I can say is that things are getting tense around here and with kids involved we're trying to not let things get bad and one of us needs a way out of this house. We have 3 cars (one still has a payment that my wife would take with her, and the other two are mine-one is worth maybe 3k, the other 9k) a mortgage (on a house that I will hopefully be keeping if i can) and a whole crap load of otherwise unsecured debt. Any advise/help would be appreciated (pm's are welcome as well). Thanks for any and all help.

[lrprn]

I'm new to this, so sorry if it's all over the place.

No worries - we've all been where you've been right now. It gets better once you have a plan.

I just did an online means test and basically combined we make too much money to qualify for a Ch 7 living in the same household, but, we're too broke to afford either of us to move out and setup a home.

It's very possible even when married for one of you to file individually. The key is to figure out which one of you should file on his or her own.

Once one of you files and gets rid of all unsecured debt (and potentially surrender an asset or two if it makes sense to do so), then the extra money that's freed up is used to split the households.

Another possible option is to file a 13 together, get a legal separation, then have your lawyer file an amended plan that accommodates two households. I don't know if this would fly in your local court - you need sound advice about this before you would try it.

We have 3 cars (one still has a payment that my wife would take with her, and the other two are mine-one is worth maybe 3k, the other 9k)

No matter whether you file a 13 or a 7, being able to keep two cars for yourself will be unlikely unless your state can protect the equity you have in both with your auto exemption. It will help us help you better if you can share which state you'd be filing in.

... a mortgage (on a house that I will hopefully be keeping if i can)

Are you up to date on the house payments? Are both of your names on the house loan? Are both of your names on the house deed?

Planning a bankruptcy is perfectly legal and, in fact, is the best thing you can do for yourselves. What you need is to find out where you both stand as far as filing and whether filing together or separately makes the most sense.

What you need to do now is set up 3-4 free initial consultations with experienced bk lawyers in your area. Lay out everything and find out what's going to be possible in your situation and what isn't.

The stress in your marriage is far too common these days in our active military. Our son is active Army - a sargeant - and his year in Iraq cost him his marriage. We're here to help you sort things out as best we can - hang in there. There will be light at the end of the tunnel again if you continue moving forward exploring all your options.

[badfishy]

We are current on absolutely everything (for now). Yes, both of our names are on the house, which I'm not particularly concerned with, as I'll be carrying the loan and the property. The stress in my marriage, unfortunately, has been there for some time...but the $$ thing really broke the camels' back so to speak. Now we both need to move on, we're just trying to put some money together to make that happen.

[GeG_Lost]

One way or another the military benefits count as income. If you lived on a base that wasn't privatized, in theory it might not count but you wouldn't get to use housing as an expense either. If I were you I would talk to an attorney before you begin to feel like you have no options. My parents divorced and filed bankrupcty at the same time and they were able to use the costs of the two households to pass the means test.

[GeG_Lost]

I should add that our attorney is actually a military spouse herself. She tried to not put our housing allowance on the income more as a principle than anything else. The trustee picked right up on it at the 341 and told her to resubmit everything even though we are still under the median with it added.

[badfishy]

well, this is especially crappy. I also just noticed that I have deployment benefits within the past six months. >

[Naomi]

It would be nice if non taxable military benefits didn't count as income, but like the others said...seems like you can't do it that way.
Our situation is a little different (prior military) and using the GI Bill (education benefits for those who aren't familiar). It's almost doubling our income since we're both in school. The money is non taxable and doesn't show up anywhere as far as tax returns, but I don't think we could explain away an extra $2800/month in our bank account so we'll have to wait until benefits are gone early next year to file. Well, then probably wait another 6 months to show our true income - then file.

This forum has been such a help to me with all the info/advice given. Especially one person in particular...

I'm sure if you continue to post, that others here more experienced will help you out as much as possible.

Have you looked around for attorneys in your area?

Here is a link to exemptions listed by state that I pulled from a forum on here.

http://www.thebankruptcysite.org/bankruptcy-exemptions/

I had no clue about auto exemptions and basically how any of it worked so it was good to read this.

[badfishy]

Yes, I believe we've been lucky enough to meet "the guru" in our area. I talked to a couple other lawyers, and when I mentioned I had a pending appointment with this other guy whom I thought was just a bk mill they all told me the contrary and that he was "the guy". So, I'm pretty confident...only problem now is that my wife furnishing her new place w/ cc's....prolonging this process by another 3-4 months maybe? Anyone have any advice on that?