House cma report today...maybe ch7 instead of 13 now!

[Billssuck]

Hello,

I have only had one consult with my attorney and we go next week to fill out our forms. He initially thought a CH 13 but what I have been reading from this forum may lead us to a CH 7.

We are under Missouri's median income for a family of 4 by about $1,200 for a year. I filled out the forms for the means test and it shows a DMI of -$985. The big kicker today for me was when I got my CMA report on my house showing that the house's value if sold today would be about $7,000 less than what we what we owe on it so we don't have any equity in it to worry about exemptions on it. We do have four very older high mileage cars that are paid off, and we can exempt everything except about $2,500 of them which means we may have to surrender one. But oh...if we can do a CH 7 instead of a 13, I'd gladly do that and not have to put our lives on hold for the three years we'd be in the plan.

Since I have primarily looked at the ch 13 area of this forum, I was wondering if I am thinking right? And if I am now looking at a 7 instead of a 13, how are the attorney's paid if not through ch 13 plan and do I need to now put a value on everything I own (household furniture, appliances, jewelry, etc.)? I've been thinking so long about a 13 that I don't know as much about a 7. Any advice would be appreciated!

[TEW]

If you are -985 and you can file chapter 7 with +$166 DMI, I would get another lawyer.

[eddiep]

That is great news, over and done with, but now the bad news Yep you have to do an invatory of everything you own and place a value on it. Just kiddin, it isn't that bad, just time consuming and a little boring
Here are some links that will help with that.

http://www.goodwillsew.com/page.asp?dbID=295

http://www.salvationarmyusa.org/usn/www_usn_2.nsf/vw-dynamic-arrays/D477340FFA28755C8525743D0049D1EF?openDocument

[Billssuck]

The -985 DMI is my calculation and we will find out at my appointment on next Thursday if what I figured is right (I went off of a link provided in this forum). If I feel he isn't doing right by us then, I will seek other advice. Thanks for your response.

[eddiep]

I noticed you said you were below median by $1200 for the year. Did you use the last six months income to come to that figure? Does that mean you are under by $100/month. I'm not saying you couldn't file ch7 being that close to median but if your attorney only had that info during the first meeting maybe he was just being cautious until he had all the information from you. Good luck

[HHM]

I agree, I wouldn't dump your attorney at this point. Most of the time the attorney is working off of your "rough" numbers. But, if you have little disposible income, and are just under median, then yeah, you can probably get a 7. You haven't really shared your full situation in this thread, so there maybe other reasons why you would need to be 13 (i.e. behind on the mortgage and you want to keep the house., etc).

[eddiep]

I just re read you post and I noticed that you asked how you would pay attorney in ch7 since the fees are not rolled in. That is another big difference between ch7 and ch13. You have to pay all the fees up front in a ch7, otherwise you could discharge his fees, and thats not going to happen!

You seem a little surprised by CMA results, perhaps your lawyer thought that you would not be able to exempt your equity in ch7.

[Billssuck]

I noticed you said you were below median by $1200 for the year. Did you use the last six months income to come to that figure? Does that mean you are under by $100/month. I'm not saying you couldn't file ch7 being that close to median but if your attorney only had that info during the first meeting maybe he was just being cautious until he had all the information from you. Good luck

You're right...our attorney probably didn't know that our income would be under the median since it was so close and he was probably being cautious with us. Yes, I have used all of our gross income from pay stubs for the last six months to come to that figure (11/01/08 through 04/30/09). At that time, I was working three jobs trying to make ends meet to pay the bills and we still are just couldn't do it anymore. If I would have known I was gonna file bk, I wouldn't have tried to do that.

[Billssuck]

I agree, I wouldn't dump your attorney at this point. Most of the time the attorney is working off of your "rough" numbers. But, if you have little disposible income, and are just under median, then yeah, you can probably get a 7. You haven't really shared your full situation in this thread, so there maybe other reasons why you would need to be 13 (i.e. behind on the mortgage and you want to keep the house., etc).

I agree with you and eddiep that I shouldn't jump the gun yet with my attorney. He really did just have preliminary numbers and I am the one who is crunching them at home trying to see where we are at. Also, to answer your question, we are current on our mortgage (advice he did give to us during our initial consult) so we don't need to use a 13 for that. In fact, I'm not adverse to giving up our house if need be but my husband doesn't want to. As far as equity goes, the only thing right now that I see as a problem is the old cars and we may have to give up one; I'm not adverse to that either. I just want what is best for our financial future be it with or without the house and/or car.

[Billssuck]

Hi again eddiep

I just re read you post and I noticed that you asked how you would pay attorney in ch7 since the fees are not rolled in. That is another big difference between ch7 and ch13. You have to pay all the fees up front in a ch7, otherwise you could discharge his fees, and thats not going to happen!

You seem a little surprised by CMA results, perhaps your lawyer thought that you would not be able to exempt your equity in ch7.

How much is the typical CH7? A CH13 was gonna be a little over $3K. Is a CH7 more or less than a CH13? I think I will email the attorney to ask him what the cost difference is. I may not be able to file the 28th if I have to come up with $2K more upfront for a CH7.

We weren't sure about the house equity during our initial consult. He was probably just being cautious again. And being the CMA only showed $7K less than what we owe, that really is close. In fact, I am surprised the CMA wasn't a lower amount with the economy as it is and the houses just sitting around for sale. One just down the road has been on the market for almost 3 years and they have dropped the price $50K since first listing it.

[eddiep]

Im not positive, but my ch7 is $1500

You also have to take into account 6% to 8% realtor fees to sell the house, I have seen that that comes off the equity.

[Billssuck]

Im not positive, but my ch7 is $1500

You also have to take into account 6% to 8% realtor fees to sell the house, I have seen that that comes off the equity.

If it is that amount, I could handle that.

I hadn't thought about the realtor fees reducing the equity, thanks for adding that info!

[eddiep]

My lawyer wanted half down to retain him, other half prior to filing and that included the $299 court costs.

[Billssuck]

Thanks

My lawyer wanted half down to retain him, other half prior to filing and that included the $299 court costs.

I just checked our attorney's website and it says I need to pay $999 (that includes $299 court fee) to file and he will put the rest into an easy interest-free payment plan. Let's see how that goes...

Thanks for your quick reponses. I don't sleep well these days with the BK pending so I've been up late.

[eddiep]

Since you are no longer working the extra jobs could you wait a month or two if you are too close to median? (do you have any creditors banging down your doors yet?)

They will also look at the "totality of the circumstances". In schedules J and I they will look at your "current" income. I would think that with a current and ongoing decrease in income your chances for a ch7 are better.