Maybe qualify for a chapter 7 instead of a 13?

[cleanslate01]

So, we have been planning a chapter 13 all along as per our first lawyer's recommendation. At the time, we lived in a different state so our numbers were different. We have since moved and hired a different lawyer. I am prepping all the docs to send them and figured I would take another look at the means test for kicks. The 6 month median for a family of 4 where we live is approx. $35K - we came in at almost $39K. Not a huge difference. Plus, hubby's overtime got axed 2 months ago and we took a $600/month hit to our income (AFTER TAXES). This is gradually trickling into the 6 month average. If it weren't for a special project he worked long hours on from March - June, we would be BELOW the median.

Our expenses are reasonable (in my opinion) - we are not over any IRS guidelines for any category except maybe cable/phone/internet bill but that's tied into my husband's job (works from home sometimes and is in IT).

The only debts we are still paying are: car payment, student loan, and back-taxes to IRS. Those things aren't going to go away regardless of a 7 or 13. Current on all of these.

Anyways, we come in negative on the means test. Not by a huge amount, but definitely negative. I think I will bring this to the lawyer's attention! Maybe we could do a 7 instead of a 13? How common is that? Like I mentioned, there are no huge luxury items - no gym memberships, no outrageous entertainment expense (with a 1 and 2 yr old we don't go out much). Our daughter will be attending a preschool type program this September but that's only $60 a month. Any insight on this? I'm wondering if there is a chance we could squeeze into a 7. That would be wonderful! We were dreading 60 months of payments. :-(

[AngelinaCat]

If you have not yet purchased the Nolopress.com Ch7 book in download-able form, please do so. This will answer many of your questions.

If you do a search around here, posters know where there are coupons. 'Hub and I paid around $17.00 and got the latest edition. It is far better than going to a bookstore and paying @ $30.00 for an out of date edition.

This will answer a lot of your questions. BTW, if you purchase online, they usually offer a 'freebe'. Take that too, as it is free and offers suggestions on simple do-it-yourself stuff, like simple wills, etc.

Good luck to you~~

[brokeasajoke]

I was 15K over the median for my state. I came in negative on means test by 850.00 or so. My schedule J ended up being negative 560.00. It all comes down to the numbers in the end... It's worth your while to really scrutinize the numbers and make sure you have ALL your expenses straight.

This site has a decent means test calculator if you have all your numbers...

http://www.legalconsumer.com/

I think one of the members here created one, I couldn't use it my district wasn't in his listing.

Good Luck!

[LuciluS]

Any reason why you are wanting to get your Bankruptcy filed? I ask this because our BK journey started late last Sept. when we retained our BK Attorney & will be filing in 9/09. If there are no pressing judgements, granishments, I would hold off filing until your income is under the State's Median Income as a lot of posters have said the US Trustee gets involved and lots more paperwork. And I certainly didn't want to be in 'Debtor's Prison for 60 months' in a Chapter 13 LOL!

Read all the stickies on this forum. And then utilize the 'Search' button for questions you can't find. What we are doing is called 'planning your Bankruptcy' and there's nothing illegal about it.

I was receiving some monthly monies that was deemed income. Because of the stock market, I received my last payment 2/09. We stopped paying most of the Credit Cards in late Sept. One we kept paying for 3 mths as I had a balance transfer in Aug. & Attorney wanted 3 min. mthly pymts plus $25 made on tht account. Of course, that was when we thought we would be filing in 1/09.

Hubby found this forum in Oct. and it is here where I found out those monthly monies were deemed income. So we will be filing on 9/09 using Dh's Mar - Aug Gross Income. I receive SSD which is exempt from the means tests.

Yes, we received 100's of calls. When I knew each Credit Card Co. had our Attorney's information, I quit answering the phone at the advise of our Attorney. I picked up a NCO collector call by accident as it showed a cell phone with an Area Code where hubby's uncle lives. OMG! That was the most hateful woman I have every spoken to. She threatened to take our house and our cars. I laughed at her as this specific CC is in my name only & I'm on Social Security Disability which is exempt.

Yes, just the other night I took the time to open all the Collection Agencies letters and match them with the Credit Card Statements. I will need to list them along with the CC, but just list the $ amount once. If I'm to get our papework to our Attorney as soon as possible after the 31st of Aug., I've got a lot more work to do.

Because Dh is an over the road truck driver his Gross or Net Income is never the same on his weekly paychecks. Attorney has asked for a detailed list of paycheck from his employer. But, in the meantime, I've set up a spreadsheet and have it ready to fax to Dh's office for the signature if they are unable to print one from Mar - Aug. as the paychecks are in 2 different quarters and Aug. doesn't end the quarter.

Got to make a call to our Mortgage Co. and find out if during the bankruptcy our monthly mortgage payments need to be sent to a different address (normally the bankruptcy dept.) Need to do the same thing with Dh's truck payment. We are keeping the home and his truck. My van is paid for. Hubby has to call as he has a ParentPlusLoan on his son & it is ACH from our checking account each month.
From reading once you file, you go into what they call an 'Automatic Stay' where creditors cannot take monies from your checking account or have any contact with you.

Might be advantageous to hold off BK for a couple of months if you can.
Just my thoughts. Good Luck

Luci

[cleanslate01]

We have been waiting because of timing.
First we lived in Florida and we were both working. The 2 incomes threw us WAAAAAY over the median. We knew I would be quitting my job when our baby was born so we waited 6 months for our income to stabilize to one salary. Also, the added person to the household gave us some more wiggle room. Just as that happened, hubby's job transferred us to Indiana. The numbers were kinder to us if we filed here so we waited 90 days to establish residency and hired a new lawyer. But that required us to come up with $1500 on one income - not easy for us! With a few of his big overtime checks, we paid little by little. So we are ready to file now.

We MAY wait another 2-3 months to file if it means the difference between a 7 or 13. Fine line though because he's interviewing for a new job that would pay a lot more. If he gets that job, those checks would pretty much negate any benefit to waiting. We MIGHT be able to make it because we are negative on the means test and schedules I and J. I will check out the test mentioned here and see what it looks like.

And I agree that "planning you bankruptcy" is just smart! Why rush into it and lock ourselves into 60 months of payments if we don't have to. Yes, there are annoying calls but there are no judgments against us (yet) and no wage Garnishments.

[cleanslate01]

Shouldn't my lawyer be able to tell me about the means test? I guess I could just ask him to run the numbers for a 7 vs. 13.

[Amy26]

Yes, and I hope you interviewed 3-4 lawyers to see what varying opinions you got.