Quetions On Chapter 7

[lostinnola]

I have a question on if I would qualify for Chapter 7. My wife and I recently quit our jobs to relocate from Ohio to Louisiana. It was suppose to be a career change going from the corporate world to becoming a teacher. I got into a program similar to Teach for America. They do not promise you a job, but they have always had 100% placement (until this year). Anyways, my wife and I went from making $90,000 a year and now we are making less than $40,000 since I could not get a job teaching. I know we qualify based upon the means test. Are intentions were to keep all bills current and up to date but it is obvious that it won’t be possible since my teaching job did not work out. Here are the questions I have.

1.Will we qualify since we voluntarily quit our jobs and it decreased our income? This was not our original intention.
2.Most of our debts are newer debts (within the last 2 years), does that matter?
3.We own a house in Ohio we are about $60,000 upside down on. Will we be able to wipe that out by filing in Louisiana?
4.Will we be able to file in Louisiana, even though we have only lived here for 3 months.
5.Will we be able to keep our cars providing that we can maintain the payments?

Thanks for all of your help.

[music12]

just because you voluntarily quit does not disqualify you from bk. you didn't know you wouldn't get a teaching job.

as to age of debts, it's usually advised to wait 90 days for them to age (esp. credit cards). 2 years is more than enough.

i suppose you are giving up the ohio house? so that debt would be discharged along with everything else.

i think 3 months is just the amount of time you need to live there in order to file there; however, if you want LA exemptions, there might be a longer waiting period - you'd have to check state rules.

keeping the cars is usually possible; it would be either through a reaffirmation or a ride-through or a redemption.

[lostinnola]

Thank you for the answers. We don't really own or have any assets other than furniture, cars (which we still owe on), house (which we are upside down on), so exemptions won't really matter to us.

Thanks again.

[music12]

exemptions can matter as far as how much cash you have in the bank. some states allow only $150. federal exemptions allow $11,000. it matters!

[lrprn]

1.Will we qualify since we voluntarily quit our jobs and it decreased our income? This was not our original intention.

The bk court doesn't care why you are now unemployed. A few trustees might ask during your 341 meeting why you filed bk - be honest and briefly explain in a few sentences what happened. It won't be a problem.

2.Most of our debts are newer debts (within the last 2 years), does that matter?

As long as you haven't taken on a lot of big debt in the last few months before filing, the debts weren't for luxury goods, you've paid all your creditors equally, and you haven't transferred a large amount of cash or secured assets your family or friends in the last year, you are good to go.

3.We own a house in Ohio we are about $60,000 upside down on. Will we be able to wipe that out by filing in Louisiana? 4.Will we be able to file in Louisiana, even though we have only lived here for 3 months.

Since you just moved to Louisiana, after living there for 91 days to establish residency you can file in Louisiana. HOWEVER, you will have to use the Ohio bankrupcy exemptions when you file. The current bk law won't allow a filer to file in a state until they have lived there for two consecutive years.

5.Will we be able to keep our cars providing that we can maintain the payments?

*IF* the equity in one car (what you owe on the loan minus its true current market value given its condition) is fully protected by (in your case) the Ohio auto exemption of $3,275, you can keep that car for sure. Ohio also has a wildcard for $1,025 that hopefully can protect your second car - does it?

If these exemption amounts won't protect the equity in one or either of your cars, then you have several options to consider: (1) Sell one of the cars and buy a reasonable new/used car so there won't be any equity in at least one of them; (2) Determine the actual current value of your car and have your lawyer offer a 'pay back' deal to the trustee to buy one or both cars back over time from the court; or (3) Surrender the car that's most over the protected auto or wild card exemption, drive one car until your case is discharged, then purchase a second car at that time.

With the two states involved, you need to find an experienced bk lawyer to help you sort out what are your best options in this situation. Set up 3-4 free initial interviews with experienced bk lawyers in your area - you'll learn a lot! Hope everything works out to your advantage.