Am I a good candidate for Chapter 7??

[Scott71785]

Hey Guys,

Sorry for posting twice, but I figured I would just list my entire situation, numbers and all, and see if anyone on here can tell me if I would have any problems filing.

I am in a Northern California District. I currently rent a room from my brother and his fiance, and pay only $665/month in "rent", but I am only living here temporarily. That $665 includes utilities.

The IRS standards for my area are:

Median Income Family of 1: $4099
Food & Clothing: $517
Utilities: $542
Mortgage/Rent: $1452
Transportation (2 vehicles): $522
Vehicle Ownership (2 vehicles): $978 ($489 each)

My numbers:

Monthly gross income (6 month avg): $6093
Monthly Taxes: $1790.56
Telecommunications: $140 ($100 cell phone, $40 internet, both required for my work)
Medical: $80.53
Disability: $37.50
Car1 Payment: $586.22
Car2 Payment: $310.11
Rent: $665
Gas (long commute, drive alot): $450
Car upkeep, lots of miles on my car a year: $100/month
Unsecured Non-Priority debt: $41,700 ($18,500 debt to my employer paid back via payroll deductions, close to $1000 per month. $6,700 in credit card debt. $16,500 in unsecured debt from upside down in vehicles).

Heres the deal.

I pass the means test if I use the IRS standards for Housing and utilities. If I switch and put in what I ACTUALLY spend... I fail. The problem is... I don't want to live with my brother forever. I'm 23 years old, and there is no way I can afford to get my own place.

I am way too upside down on my vehicles, so I cannot get out from underneath them.

What do you guys think?

[LSUTiger32]

Hey Guys,

Sorry for posting twice, but I figured I would just list my entire situation, numbers and all, and see if anyone on here can tell me if I would have any problems filing.

I am in a Northern California District. I currently rent a room from my brother and his fiance, and pay only $665/month in "rent", but I am only living here temporarily. That $665 includes utilities.

The IRS standards for my area are:

Median Income Family of 1: $4099
Food & Clothing: $517
Utilities: $542
Mortgage/Rent: $1452
Transportation (2 vehicles): $522
Vehicle Ownership (2 vehicles): $978 ($489 each)

My numbers:

Monthly gross income (6 month avg): $6093
Monthly Taxes: $1790.56
Telecommunications: $140 ($100 cell phone, $40 internet, both required for my work)
Medical: $80.53
Disability: $37.50
Car1 Payment: $586.22
Car2 Payment: $310.11
Rent: $665
Gas (long commute, drive alot): $450
Car upkeep, lots of miles on my car a year: $100/month
Unsecured Non-Priority debt: $41,700 ($18,500 debt to my employer paid back via payroll deductions, close to $1000 per month. $6,700 in credit card debt. $16,500 in unsecured debt from upside down in vehicles).

Heres the deal.

I pass the means test if I use the IRS standards for Housing and utilities. If I switch and put in what I ACTUALLY spend... I fail. The problem is... I don't want to live with my brother forever. I'm 23 years old, and there is no way I can afford to get my own place.

I am way too upside down on my vehicles, so I cannot get out from underneath them.

What do you guys think?

I think I wis I was you. Dude, you are not bankrupt and you should be able to afford a place of your own on your income. Why in the world does a single guy have $1,000 a month worth of car payments on two cars?


Sample Budget

Income: $4,300

Rent: $1,300 (you can find something much closer to work for $1,300 a month)
Utilities: $300
Telecommunications: $140 ($100 cell phone, $40 internet, both required for my work)
Medical: $80
Disability: $40
Transportation expenses: $300 (move closer to work to save gas and how in the world can you spend $100 a month on cars when you have two payments)
Food: $400

Total: $2,660 (leaves you $1,700 for debt service)

Where you lose things is here:

Car1 Payment: $586.22
Car2 Payment: $310.11

Gotta hear the answer on that.

[backtoschool]

Hey Guys,

Sorry for posting twice, but I figured I would just list my entire situation, numbers and all, and see if anyone on here can tell me if I would have any problems filing.

I am in a Northern California District. I currently rent a room from my brother and his fiance, and pay only $665/month in "rent", but I am only living here temporarily. That $665 includes utilities.

The IRS standards for my area are:

Median Income Family of 1: $4099
Food & Clothing: $517
Utilities: $542
Mortgage/Rent: $1452
Transportation (2 vehicles): $522
Vehicle Ownership (2 vehicles): $978 ($489 each)

My numbers:

Monthly gross income (6 month avg): $6093
Monthly Taxes: $1790.56
Telecommunications: $140 ($100 cell phone, $40 internet, both required for my work)
Medical: $80.53
Disability: $37.50
Car1 Payment: $586.22
Car2 Payment: $310.11
Rent: $665
Gas (long commute, drive alot): $450
Car upkeep, lots of miles on my car a year: $100/month
Unsecured Non-Priority debt: $41,700 ($18,500 debt to my employer paid back via payroll deductions, close to $1000 per month. $6,700 in credit card debt. $16,500 in unsecured debt from upside down in vehicles).

Heres the deal.

I pass the means test if I use the IRS standards for Housing and utilities. If I switch and put in what I ACTUALLY spend... I fail. The problem is... I don't want to live with my brother forever. I'm 23 years old, and there is no way I can afford to get my own place.

I am way too upside down on my vehicles, so I cannot get out from underneath them.

What do you guys think?

Hi Scott1785,

You can use the irs standards for the means test, but on your schedule you have to use your actual expenses, and the important question is, how much money do you have left at the end of the month? If it is over $100 or so, then you will be pushed into a chap 13.

When I subtract all of your actual expenses, plus subtract $400 a month for food, I still show you having $1529 a month in disposable income. This will definitely put you in a chap 13.

Also, the $450 a month for gas is high, but if you have receipts it would be fine. You need to find $1400 or so a month more of legitimate expenses, like insurance, food, utilities, toothpaste, tylenol, haircuts, clothes, in order to get into the range for a chap 7.

[Scott71785]

Heres the thing... I'm more broke than you realize... I'm not listing all of my expenses.

Living is expensive lol... since I am just renting a room right now I have to eat out, so my food is costing me like $700 a month alone... I spend roughly $8 per meal, 3 times a day $24 x 30 = $720

My car upkeep is outrageous, I drive a car that gets 18MPG on the freeway. I go through tires every 30,000 miles, and brakes every 20,000 miles. It's a Lancer Evo... Driving it 100 miles a day... it's killing it.

My other vehicle is actually a motorcycle... you think, well just commute on the bike right!? Wrong... I work very early in the morning and find it impossible to build up the motivation to get on a motorcycle and freeze my bal*s off for an hour while I go to work.... So my vehicle expenses over the year are outrageous. The services on my car are anywhere from $800 - $1600 and I go through 2 services a year... My car probably costs me $4500 a year just for upkeep.

With all of this, combined with the very little amount I take for entertainment, leaves me with just enough money to make the minimum on all of my credit cards... effectively leaving me motionless.

I can't move because I do not have the money required to move because I cannot get any kind of money saved because I just scrape by. Everytime I get any kind of money, I need to spend it on SOMETHING... like a car repair, or dental work, or something along those lines.

Yes, my income is $6093, but that is pre-tax, and pre-deductions. I only bring home $1750 bi-weekly.

$3500 a month clear isn't exactly a "TON" of money when you have $1000 a month in JUST car payments...

Anyway, if you could answer my question that would be great.... I pass the means test using the IRS standards for housing/utilities/transportation/food.... If I pass the means test, with my debts that I have listed... will I be successful filing chapter 7?

[Scott71785]

Hi Scott1785,

You can use the irs standards for the means test, but on your schedule you have to use your actual expenses, and the important question is, how much money do you have left at the end of the month? If it is over $100 or so, then you will be pushed into a chap 13.

When I subtract all of your actual expenses, plus subtract $400 a month for food, I still show you having $1529 a month in disposable income. This will definitely put you in a chap 13.

Also, the $450 a month for gas is high, but if you have receipts it would be fine. You need to find $1400 or so a month more of legitimate expenses, like insurance, food, utilities, toothpaste, tylenol, haircuts, clothes, in order to get into the range for a chap 7.

What if I did this... since I live with my brother, I can easily have him give me "receipts" for the last 4 months showing that I "paid" a higher rent, and a portion of utilities.

For example, on my actual expenses, if I listed that I paid $1250/month in rent, and $300/month in utilities... and my brother supplied me with receipts to back it up... would that fly? If not... what if I stopped paying my credit cards for a couple months, and actually DID pay that amount in rent/utilities... would that fly? After I file bankruptcy I plan on moving into my own place anyway.

I could come up with a couple hundred more here or there to help push me under $100/month disposable.

Also, is it true the trustee's have to actually show up to the 341 meeting in order to be pushed into a Chapter 13? My lawyer said "in his experience, 99% of the time... no one shows up"... is this true?

[backtoschool]

Heres the thing... I'm more broke than you realize... I'm not listing all of my expenses.

Living is expensive lol... since I am just renting a room right now I have to eat out, so my food is costing me like $700 a month alone... I spend roughly $8 per meal, 3 times a day $24 x 30 = $720

My car upkeep is outrageous, I drive a car that gets 18MPG on the freeway. I go through tires every 30,000 miles, and brakes every 20,000 miles. It's a Lancer Evo... Driving it 100 miles a day... it's killing it.

My other vehicle is actually a motorcycle... you think, well just commute on the bike right!? Wrong... I work very early in the morning and find it impossible to build up the motivation to get on a motorcycle and freeze my bal*s off for an hour while I go to work.... So my vehicle expenses over the year are outrageous. The services on my car are anywhere from $800 - $1600 and I go through 2 services a year... My car probably costs me $4500 a year just for upkeep.

With all of this, combined with the very little amount I take for entertainment, leaves me with just enough money to make the minimum on all of my credit cards... effectively leaving me motionless.

I can't move because I do not have the money required to move because I cannot get any kind of money saved because I just scrape by. Everytime I get any kind of money, I need to spend it on SOMETHING... like a car repair, or dental work, or something along those lines.

Yes, my income is $6093, but that is pre-tax, and pre-deductions. I only bring home $1750 bi-weekly.

$3500 a month clear isn't exactly a "TON" of money when you have $1000 a month in JUST car payments...

Anyway, if you could answer my question that would be great.... I pass the means test using the IRS standards for housing/utilities/transportation/food.... If I pass the means test, with my debts that I have listed... will I be successful filing chapter 7?

See my above post. You still have too much disposable income after factoring in your actual expenses in allowable categories. You cannot put $750 a month of "eating out" on your schedule it will get thrown out.

Also, the trustee might say that you need to get rid of either the car or the motorcycle, and that would free up one payment for a plan, etc... In order to get into a chap 7, using the allowable expense categories, you can only have around $100 or so left at the end of the month, after paying all of your ALLOWED expenses. The key here is coming up with expenses that you can prove in the allowable categories such as:

food (around $400 a month)
utilities (a portion of your brother's utility bill)
rent
insurance (all types, medical, car, disability, renter's, life, etc.)
over the counter medicine
medical
clothes
gas
car payment
personal care items
haircuts
doctor's appointments
parking permits
phone and cell phone
etc....

[backtoschool]

What if I did this... since I live with my brother, I can easily have him give me "receipts" for the last 4 months showing that I "paid" a higher rent, and a portion of utilities.

For example, on my actual expenses, if I listed that I paid $1250/month in rent, and $300/month in utilities... and my brother supplied me with receipts to back it up... would that fly? If not... what if I stopped paying my credit cards for a couple months, and actually DID pay that amount in rent/utilities... would that fly? After I file bankruptcy I plan on moving into my own place anyway.

I could come up with a couple hundred more here or there to help push me under $100/month disposable.

Also, is it true the trustee's have to actually show up to the 341 meeting in order to be pushed into a Chapter 13? My lawyer said "in his experience, 99% of the time... no one shows up"... is this true?

The trustees RUN the 341 meeting so they always show up. The US trustee (which is a different person than the local trustee assigned to your case) shows up often if the income is over the median or there is over 100k in unsecured debt. The creditors often don't show up.

The trustee may match your rent payments to your bank account statements so right now they don't match. You will have to provide at least six months of bank account statements and this will show a rent payment of $665. The trustee will definitely notice that your rent doubled right before filing, and will throw your case out.

Now, if you move to another place that is $1,200 a month plus utilities that is a different story and will make sense to the trustee. Often staying with family is a temporary thing and it would make sense if you had to get your own place.

If you are changing your expenses, (ie, raising your rent that you pay to your brother) you will have to do so for at least six months before you can file.

[Scott71785]

The trustees RUN the 341 meeting so they always show up. The US trustee (which is a different person than the local trustee assigned to your case) shows up often if the income is over the median or there is over 100k in unsecured debt. The creditors often don't show up.

The trustee may match your rent payments to your bank account statements so right now they don't match. You will have to provide at least six months of bank account statements and this will show a rent payment of $665. The trustee will definitely notice that your rent doubled right before filing, and will throw your case out.

Now, if you move to another place that is $1,200 a month plus utilities that is a different story and will make sense to the trustee. Often staying with family is a temporary thing and it would make sense if you had to get your own place.

If you are changing your expenses, (ie, raising your rent that you pay to your brother) you will have to do so for at least six months before you can file.

I see... most of the time I pay my rent in cash though... I HAVE written a check or 2 to him though for $665.

[LSUTiger32]

What if I did this... since I live with my brother, I can easily have him give me "receipts" for the last 4 months showing that I "paid" a higher rent, and a portion of utilities.

For example, on my actual expenses, if I listed that I paid $1250/month in rent, and $300/month in utilities... and my brother supplied me with receipts to back it up... would that fly? If not... what if I stopped paying my credit cards for a couple months, and actually DID pay that amount in rent/utilities... would that fly? After I file bankruptcy I plan on moving into my own place anyway.

I could come up with a couple hundred more here or there to help push me under $100/month disposable.

Also, is it true the trustee's have to actually show up to the 341 meeting in order to be pushed into a Chapter 13? My lawyer said "in his experience, 99% of the time... no one shows up"... is this true?

Great idea, have your brother help you lie to the United States government so you can file.....that way you can share a jail cell!

[Scott71785]

Great idea, have your brother help you lie to the United States government so you can file.....that way you can share a jail cell!

Oh quit it lol... I'm just trying to find a way to file, so I CAN afford my own place... because right now I cannot.

I could afford my own place, if I stopped paying my credit cards, and my car, and at the same time I found my own place to live for $1200 or $1400 a month...

If I went that route (Stopped paying my car, used that money to get into my own place)... how long would I have to be in that new place before I could file?

Could I theoretically file instantly?

[LSUTiger32]

Oh quit it lol... I'm just trying to find a way to file, so I CAN afford my own place... because right now I cannot.

I could afford my own place, if I stopped paying my credit cards, and my car, and at the same time I found my own place to live for $1200 or $1400 a month...

If I went that route (Stopped paying my car, used that money to get into my own place)... how long would I have to be in that new place before I could file?

Could I theoretically file instantly?

LOL! I actually made myself laugh on that one, but seriously no you cannot make stuff up to file. This is serious stuff.

I am still baffled. What is the car worth and what in the world kind of motorcycle is $300 plus a month! Sell them, get something reasonable for what you have to drive as you are obviously driving something ridiculous if it needs tires every 30,000 miles.

I am not trying to stop you from filing, I am just saying that YOU CAN make this work. You have a good income and you can cover your expenses. You can get out of it.

[backtoschool]

Oh quit it lol... I'm just trying to find a way to file, so I CAN afford my own place... because right now I cannot.

I could afford my own place, if I stopped paying my credit cards, and my car, and at the same time I found my own place to live for $1200 or $1400 a month...

If I went that route (Stopped paying my car, used that money to get into my own place)... how long would I have to be in that new place before I could file?

Could I theoretically file instantly?

Six months in the new place would be optimal. If you moved out, got your own place, stopped paying on your credit cards, and filed in six months, you would most likely be a candidate for chapter 7. You could probably get away with three months, but since expenses are averaged over six months, you will still probably have some disposable income after three months. I think six months would be optimal.

[Scott71785]

LOL! I actually made myself laugh on that one, but seriously no you cannot make stuff up to file. This is serious stuff.

I am still baffled. What is the car worth and what in the world kind of motorcycle is $300 plus a month! Sell them, get something reasonable for what you have to drive as you are obviously driving something ridiculous if it needs tires every 30,000 miles.

I am not trying to stop you from filing, I am just saying that YOU CAN make this work. You have a good income and you can cover your expenses. You can get out of it.

Yeah I know lol, I won't do anything my lawyer says not to... lol we did just move into this place though about 5 months ago, and I looked back in my bank statements, and I can only find a SINGLE check written to my brother, and it was the first month for $665 (April)...

[Scott71785]

Six months in the new place would be optimal. If you moved out, got your own place, stopped paying on your credit cards, and filed in six months, you would most likely be a candidate for chapter 7. You could probably get away with three months, but since expenses are averaged over six months, you will still probably have some disposable income after three months. I think six months would be optimal.

Thats the thing though... I cannot let my credit cars and car payment go for 6 months can I... won't I get sued and they be garnishing my wages after just a few months? 3 months would be okay I think, but 6 months seems a bit long.

I was always under the assumption, that you had approximately 3 months after stop paying of anything (car, credit card, whatever) before any action against you really starts to happen (repossession, etc).

Also, I am worried about what is to come. I have a $18,500 debt to the company I work for. Long story short, there was a misunderstanding in the amount of over-time I was supposed to be being paid while being on-call, and it went unnoticed by everyone for 14 months... I noticed it and told my manager, and I now get to pay it back in payroll deductions which are going to start very soon. They are going to deduct $500 a pay check from me until I have this paid off... When that happens, I am going to be really screwed, so it's another reason I am trying to find a way to file right now... I plan on paying that $18,500 I owe my company regardless of if I file bankruptcy or not.

Ohhh one more thing. Would it hurt my chances of filing for bankruptcy if I reposessed my 2 vehicles? Or even just one of them? If I repossess it, then I won't have that payment every month.... Or does it not matter in the end?

I'm so confused lol.

[Scott71785]

LOL! I actually made myself laugh on that one, but seriously no you cannot make stuff up to file. This is serious stuff.

I am still baffled. What is the car worth and what in the world kind of motorcycle is $300 plus a month! Sell them, get something reasonable for what you have to drive as you are obviously driving something ridiculous if it needs tires every 30,000 miles.

I am not trying to stop you from filing, I am just saying that YOU CAN make this work. You have a good income and you can cover your expenses. You can get out of it.

Also, if you don't remember I said above that I am stuck with these vehicles.

My main car, my commuter car (the Lancer evolution LOL)... I owe $31,000 on them. It is only worth $17,500 trade in, $19,500 street value on EXCELLENT rating... which it is not. It is fair to good. That leaves me at way too upside-down... can't get out from under that.

My other vehicle is a motorcycle. I owe $8,300 and it's only worth $5,200 trade-in, $6,750 street value.

I'm in the process of having my motorcycle repossessed, but I do not want to go through with it, if it hurts my chances of filing for bankruptcy.