unsecured debt over 100k

[someday]

When we spoke to our atty, he said this might be a problem for us. At the time, I didn't think to ask what he meant. It's now coming back to haunt me.

We sign on Tuesday. I don't know how long after that we'll file.

Does anyone know what he meant by "problem"? I'll be asking on Tuesday, but that seems like a very long way away.

[mayse]

I had unsecured debt over 100k and had no issues; had the 341 meeting today. It may be debt in relation to your income but I'm not sure...we had 140k in unsecured debt and 270k in secured, 96k in income and filed chapter 7.

[someday]

mayse,

thanks so much for responding.

May I ask approximately where you filed? I'm filing in the Southern District of Ohio.

[mamaluv]

I have over 100k in CC debt as well and my attorney said that it may raise an eyebrow with the trustee because of the large amount. Mine is an accumulation over the past 4-5 years-which I explained to her and she didn't probe any further.

[mayse]

I am in New Orleans; I am trying to figure out why that would raise an eyebrow; possibly a balance between secured debt vs unsecured...that is the only thing I can think of. Maybe if you do not have an income to support a 100k debt; they might think you have income coming from somewhere else?

[maddog2112]

mayse, do you own a home and or car, and if so were you able to keep it? I`m currently in a 13 for the last 27 mos. and due to my income decrease and wife losing job, I`m trying to convert from 13 to 7. My lawyer is trying to tell me I`m over the median income for KY, which would make conversion impossible. I`m at 90k. I think she`s trying to blow smoke up my &*^%$. Ps. Someday, i`ve read on some other posts that 100k unsecured is where they start to look closer at your situation. I was at 120k unsecured but filed a 13 so that wasn`t an issue.

[mayse]

Yes, we have a house and two cars. We make 96k a year and filed chapter 7. Our mortgages (one is an SBA loan from a failed business) are 3400 a month, plus car payments totalling 1400 a month (fortunately one car will be paid off in two months). Those costs, coupled with the standard monthly expenses, qualified us for 7. It is all dependent on how much secured debt you keep. We said we were going to reaffirm the mortgages and cars however we do not intend to (lawyer said never reaffirm anything). Our plan is to put our house up for sale and move as we hate louisiana. If the house does not sell, we are going to walk away from it which is why we are not reaffirming (won't have a foreclosure on our credit).

It all depends how much secured debt you keep in ratio to your income. Even if you don't intend to reaffirm, still list it as if you are going to so that you can pass the test. Our attorney says the courts will see that we did not reaffirm and go "hmm", they did not reaffirm and move on.

[maddog2112]

Thanks Mayse, I`ll be starting fresh on monday with our lawyer armed with more info. I wish I had your attorney!!!

[HHM]

It's not a problem in a legal sense, but when unsecured debt gets over $100K, those cases tend to invite more scrutiny by the U.S Trustee.

[IBroke]

I am in New Orleans; I am trying to figure out why that would raise an eyebrow; possibly a balance between secured debt vs unsecured...that is the only thing I can think of. Maybe if you do not have an income to support a 100k debt; they might think you have income coming from somewhere else?

On the other hand, if I had income to support a 100K debt, why should I file BK in the first place (BTW, IF you would have such income you couldn't file Chapter 7 in the first place)?

[mayse]

You have to consider the secured debt as well. If I only had unsecured debt of 100k, I would not have filed. I have 360k debt total.

[Clouddancer]

On the other hand, if I had income to support a 100K debt, why should I file BK in the first place (BTW, IF you would have such income you couldn't file Chapter 7 in the first place)?

You lost me there. If you file for bankruptcy wouldn't that mean you didn't have the income to support the debt?

[anuta]

You know, I don't understand why the UST gets involved. Our situation involves over 300K of unsecured debt. I haven't paid on any of the cards since last summer. My DH hasn't used his cards in a year. In late 2005 early 06 almost all of our rates started to go up we went from 6% to 29%. There were no late payments. Once one card made the hike--all of them did. We struggled until last summer to make each minimum payment but at 29-32%, we just couldn't do. We really tried. We each had many CC from before we were married (8 years ago) and never had any joint cards. We did start transfering back and forth to make payments. I figure that very close to half of what we owe is interest. It's true, we never turned down a credit increase. Why does something like this raise a flag for the UST? Had our cards remained at 6%, we would have happily made payments till our dying day.

[slam22]

Everyone's case is a little different so it's hard to say why a UST would or would not get involved. To a large degree it appears to depend somewhat on where you are located. We are in Southern California and had 225k in unsecured debt as well as an upside down HELOC of around 100k (now it's closer to 200k). Our income when we filed was around 100k and did not hear a peep from the UST. We are still in our house BTW and have not made a mortgage payment in 15 months and still no NOD has been filed. Crazy times.

[DeadManCrawling]

We have a similat situation as some of you. Over 100k unsecured and a giant mortgage that we could afford before our income dropped by 70%.

It is a "totality of circumstances" thing as far as how it happened.

If you acquired the debt in a legit fashion, used to be able to afford, etc, you have nothing to worry about. The UST might, however, view the 96k income with suspicion and look more closely at your expenses to see if you can fund a ch 13. That's the only real issue.