Am I a good candidate for Chapter 7??

[bkmaggster]

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.

6 months of bank statements are not required in many districts. In mine, for instance, the requirement is only one month's bank statement that includes the filing date.

OP needs to find out what the requirement is for his district.

I don't think the trustee will throw the case out if his rent doubles because he moved into an apartment, but it will definitely look fishy if the brother doubles the rent!

I agree with everyone who suggests that the OP should get rid of at least one of the vehicles, and get into an apartment close to work.

Bankruptcy may not even be necessary if the car and bike are gone.

[backtoschool]

Nobody here is going to tell you to lie under oath about the rent you paid your brother. The fact that you paid cash will make the trustee assume you paid less than $665 not the other way around. Lying under oath is fraud and could get you in serious trouble. (best case scenario your case is thrown out, worst case scenario, you go to prison)

The $500 payback of overtime is a legitimate expense that you can claim on your schedule.

Lawsuits on unsecured debt will take at least six months.

Repossession will lower your monthly expenses, but you will still be responsible for the deficiency.

[LSUTiger32]

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.

What kind of car cost I guess around $40,000 since you still owe $31,000 and has tires that can't last more than 30,000 miles? Yikes.

I think you are going to find it extremely hard to file. You rent a room and you are trying to take $1,452 for mortgage/rent and $542 for utilities of which you actually pay $665. Any trustee who so much as has a pulse is going to see right through that. You have no utlity bills in your name and really no proof other than one check for $665 that you pay anything for rent/mortgage.

Save some money, sell the motorcycle and pay the difference. Dump the car, see if you can borrow the difference to sell it. What is the loan from work? Your work loaned you $18,000???? What was that for? Man, I am telling you and again I am only trying to help but you can EASILY make this work. You DO NOT have to eat out everyday, three times a day. That is insane. Your brother rents you a room but refuses to let you eat with the family or use the kitchen? Do you crap in the backyard because he charges for the toilet or what?

Come on man, if what you are telling me is right you can easily make some changes and avoid bankruptcy.

[LSUTiger32]

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.

Is this serious? Let them repo both of the pieces of crap you have that are costing you $1,000 a month. Then you don't need to file BK. Get you a beater and get your budget straight!!!

[pookieny]

The only person who can tell you for sure would be a lawyer, so if I were you, I would shop around for a good one and see what they say your chances are.

[Scott71785]

What kind of car cost I guess around $40,000 since you still owe $31,000 and has tires that can't last more than 30,000 miles? Yikes.

I think you are going to find it extremely hard to file. You rent a room and you are trying to take $1,452 for mortgage/rent and $542 for utilities of which you actually pay $665. Any trustee who so much as has a pulse is going to see right through that. You have no utlity bills in your name and really no proof other than one check for $665 that you pay anything for rent/mortgage.

Save some money, sell the motorcycle and pay the difference. Dump the car, see if you can borrow the difference to sell it. What is the loan from work? Your work loaned you $18,000???? What was that for? Man, I am telling you and again I am only trying to help but you can EASILY make this work. You DO NOT have to eat out everyday, three times a day. That is insane. Your brother rents you a room but refuses to let you eat with the family or use the kitchen? Do you crap in the backyard because he charges for the toilet or what?

Come on man, if what you are telling me is right you can easily make some changes and avoid bankruptcy.

Check it out dude... right now I am fine. I have extra money every month. About $600 extra, but that doesn't count all the little crap that happens that takes money from me (a dental filling for example... $200).

I pay $665 rent and no utilities because that is ALL I can afford to pay. I am living with my brother on a temporary basis to try and get myself on my feet to get my own place. My own place, will cost somewhere in the $1200 - $1500 range. My brothers place is $2500/month, by comparision.

My car is a 2006 Mitsubishi Lancer Evolution MR. It was $39,000 after tax and licensing when I bought it in December 07. It's a 4WD rally car and it shreds through tires without having to drive hard. It just does. Brakes too, 4 caliper brembo high performance brakes... My commute is almost all highway too, and I still go through tires and brakes like you wouldn't believe.

My bike isn't really the problem. I could get out from under my bike... but it's my car... how can I possibly get out from under it? No one I know has the money to loan me, and I sure don't have the credit to get a loan (last I checked my FICO was 533).

The $18,500 I owe my company is not from a loan dude wow read what I said above lol. It was from a payroll error over the course of 14 months that went un noticed. I was overpaid a couple hundred bucks each pay check, and didn't know that I wasn't supposed to be paid that... I noticed it and offered to pay it back... They are going to start the payroll deductions very soon and when that happens I WILL NOT be able to afford my current situation.

So, yes, you are right... RIGHT now I am okay... but I will NOT be okay... It is inevitable that I will need to file in the very near future, so I am trying to find a way to do it now to save myself the stress of trying to do it while truly struggling.

Also, about the eating out thing... the room I rent is a convereted detached garage... I can use the restroom, and shower. I have access to the kitchen, but my initial plan moving in here was to be very temporary... I told him I would just eat out while I was here as I only expected to be here 2 months... well it's been 5 months now.

I do go out and buy some food here or there, but with my kind of work, it's hard to not go out to eat. I work at a big company where we go out to lunches with vendors and clients all the time... I am pretty much REQUIRED to eat lunch out when I am at work. Dinner I usually eat out... Breakfast I eat at work because it's only a few bucks, and I get up really early and don't want breakfast right when I wake, so I don't eat at home.


What you are saying is true, my current situation is not that bad, but its the looming $1000 less a month I will have when the payroll deductions for that debt to my company start rolling through. On-top of that, my pay is going to be cut in about 7 months. My boss warned me 4 or 5 months ago that "within a year we will have these guys trained so you don't need to be on-call anymore"... that means I don't get all the over-time I've always got. That over-time is about $900 pre-tax each check... Imagine what that is going to do.

I look at those things coming in the near future, and I fail to see how I will make it... It is why I am rushing right now and trying to get myself into a vastly improved financial situation... so I can handle those hurdles ahead.

[Scott71785]

Is this serious? Let them repo both of the pieces of crap you have that are costing you $1,000 a month. Then you don't need to file BK. Get you a beater and get your budget straight!!!

Yeah I thought about that... but then they come after me and garnish my wages for the $14000 I am upside down on my car.... on-top of taking away that montly car payment which will make it nearly impossible for me to pass the Means test.

Speaking of that...

If I go the route of letting all my bills go and move into a more expensive place to live, that way I can pass the Schedule J... Can I let my car and motorcycle go to repossession, to help me to afford the new place? Or would that just hurt my Means test and schedule J because I would no longer have those monthly expenses?

[pookieny]

My garnishment didn't start for almost 2 years after stoping payments from a Capitol One cc. My niece has had 3 cars repo'd over the past 5 years and she has never had a wage garnishment on any of them. You would probably have to wait until your paystubs are under your state's median for at least 6 months before you could file. Unfortunately, it's based on the gross and not the net. If you forsee that within the next year that your pay will be going down, then I would start planning your bankruptcy, including stopping payments on your credit cards and not using the.

[Scott71785]

Hi Pookieny,


My sister recently repossessed her car, and they are taking her to court... so I don't want them to come after me... even though they probably wouldn't get far enough before I was able to file bankruptcy.

I think it is possible for me to file if I move into a more expensive place to live (a place that will cost about as much as the IRS standard for my county)... If I did that, I would pass the Schedule J and the Means test with flying colors...

The problem is, I cannot afford to have a car payment of $586/month, a motorcycle payment of $310/month, a rent payment of $1450/month, and a utility bill close to $450/month...

$200 gas, $400 food, $100 other essential needs (hygiene, soap, laundry detergent, etc)

That is $3500 a month... I bring home $3500 a month clear after taxes right now... I would be strapped for cash... and that doesn't even count what it will look like when I make $1000 less a month from the payroll deductions...

So... what if I let them repossess my car and my motorcycle... I no longer would have that car and motorcycle payment, but there would still be an unsecured debt in my name, for the remainder balance of the bike and car... probably somewhere in the $15,000 - $20,000 range depending what they get for auction.

if I do that... wouldn't that make me fail the Schedule J? because my "actual expenses" would no longer include the motorcycle and car... Even though I am living in a more expensive place to live?

[pookieny]

Really, they took her to court so soon? Wonder if it depends on who the loan is with. My neighbor had his Jeep repo'd 7 years ago and they have never come after him for it. REally can't answer your questions, I only would advise talking to a lawyer for free and seeing what your options can be. I had to wait a few months to file because I would have been over the median with my pay and lawyer wanted me to wait till I was under, and I was by $23 to file.

[Never_Again]

A saying that I have heard once comes to mind here...

"When the only tool that you have is a hammer, everything looks like a nail."

You are asking about bankruptcy on a board where everyone (or most) are filing or have filed for bankruptcy. Therefore, that is the tool of choice for many. But you have received some good responses.

You need to lose the car payments. The fact that you are upside down on them reflects negative equity on purchase, or too long of a finance term, but either way, you CAN sell them. It will require a bit of work. First, you have to contact the finance company, and ask them about selling them, what amount it would take for them to release the title, and would they be willing to convert the balance to an unsecured note. Many times, they will do this, since you will get more money selling them on your own then they will by selling them at auction. Essentially, they are unsecured for the amount that you are upside down on.

With the vehicles gone, you need to buy something else. So, buy a cheap car that you can get to work with. I am talking $1K to $2K tops. Make it very fuel efficient, so that you can trim that gas money as well.

You need to do something about that food budget! I don't buy the "I have to eat out every meal" argument. Even at your place, with no kitchen, you can buy a small dorm sized refrigerator, and a microwave. Possibly even a plug in skillet. One person should be able to eat on $75-$80 per week. Take a sandwich to work for lunch. If lunches are "required" with clients and vendors, then maybe they need to be a business expense? Sounds like something to talk to the boss about?

Then, you have money to pay the credit cards and unsecured car debt.

You have unsecured debt of less than 50% of one years income. Yes, that is not a good situation, but it doesn't qualify you as bankrupt. You should be able to take care of this debt inside of 18 months if you work hard enough at it. Even faster if you put your mind to it. A part time job? I know, nobody wants to do that, but it would help you get your financial house in order before the changes come.

At your income, that far over median, the US trustee will LAUGH at you if you attempt a chapter 7 bankruptcy! The reason, is that you have the income to pay these debts off. They will force you into a chapter 13, probably with 100% payment. My guess is that you will keep both vehicles, although they will allow you to cram them down to the actual value (some benefit there). And, your debt repayments will be controlled by a trustee, and not by you.

Also, what if you experience a real tragedy in the future within the next eight years? An accident, judgment, or something that results in real dollars? You will not be able to file for bankruptcy in that time. If you are going to use this "reset button," and can only use it once, doesn't it make sense to save it just in case something major comes along?

Your situation may seem bleak, but there is a way out of yours. Bankruptcy may seem like the easy way out, but it isn't in your case. It boils down to picking yourself up, and deciding to move forward. Plus, taking care of this yourself will reinforce the lessons that you need to learn in order to keep this from happening again. Bankruptcy should be used when the financial disaster has hit, not as a planning device to keep the financial disaster away.

I hope that you listen to what I am saying, and consider it carefully. I know that your first reaction will be "But I can't..." I have already heard that in responses to other posters here. But I offer it in the spirit of someone who has been through much of it, and am just trying to help. Hopefully, you will listen and take it that way. Step back, relax, and breathe. The solutions will look clearer.

[mom2three09]

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?

Just wanted to chime in and say this : Sure, $3500 a month net isn't a TON of $$$ , but we're a family of 5 --- that's right -- FIVE (includes two teenagers & a 4 yr old) -- and we live comfortably on $3500 NET per month !! Grantid, we're not in CA where the cost of living is thru the roof, but surely one person can still live comfortably enough to atleast be able to survive and pay their necessary bills each month (even in CA).

Honestly, to me, it sounds like you will definitely be put into a chapt. 13 if you file. I think you should (instead) try to sell that motorcycle and get out from under the payment. Then you should get in touch with someone who can help you make a budget... and then stick to it!!!

I have to agree, you are far from bankrupt, Scott.

ETA: I would also advise you to move closer to where you work. Get a roommate if you have to. You will save $$$ on food (because you can then cook at home) and you will also save $$$ on gas/ commuting costs.

[LSUTiger32]

Scott, I know you want out and it seems like the easy choice but I hope now you see that's it not. You can whine and complain all you want, but people here are trying to help. You don't have to like my answers, but I am spending time trying to help you because your situation can be helped. Several people have now agreed that you are not BK. Take it from people who went through this, it's not that much fun. We would all have liked to be in a situation where we could have avoided it, believe me. You don't WANT to do this. In my situation, $600,000 worth of real estate bankrupted me.....not my normal everyday bills.

More suggestions/questions:

1. "My car is a 2006 Mitsubishi Lancer Evolution MR. It was $39,000 after tax and licensing when I bought it in December 07. It's a 4WD rally car and it shreds through tires without having to drive hard. It just does. Brakes too, 4 caliper brembo high performance brakes... My commute is almost all highway too, and I still go through tires and brakes like you wouldn't believe."

Why did you buy a $40,000 rally car to drive to work? Did you consider a space shuttle???? I don't understand the car but you have it, so you need to get rid of it. Call the lender, explain the situation and see if they will let you sign a note for the difference. Tell them that they will be getting it back if they do not want to work with you. Garnishment will not happen that quickly, they cannot do that without a judgement. Dump it and start saving some money to make them an offer on the difference. Once they sell it at auction, they will take pennies on the dollar to resolve the defecit.

2. "The $18,500 I owe my company is not from a loan dude wow read what I said above lol. It was from a payroll error over the course of 14 months that went un noticed. I was overpaid a couple hundred bucks each pay check, and didn't know that I wasn't supposed to be paid that... I noticed it and offered to pay it back... They are going to start the payroll deductions very soon and when that happens I WILL NOT be able to afford my current situation."

Talk to your employer. Are you kidding me, they want $1,000 a month out of your paycheck to resolve THEIR MISTAKE? Explain to them that you cannot afford that, and the mistake was not your fault. Were they overpaying $1,000 a month? Why didn't you notice? If they were overpaying $300 a paycheck, offer to pay that back. It's better than $1,000 a month. I would even consider looking for another job if there is that possibility. Explain to them that their mistake could bankrupt you.

3. "Check it out dude... right now I am fine. I have extra money every month. About $600 extra, but that doesn't count all the little crap that happens that takes money from me (a dental filling for example... $200)."

Check this out again dude, you are NOT bankrupt. You have money left over at the end of the month and that's with your way over the exemption spending. As other people have tried to explain to you as well, you will NOT qualify for a 7.

4. "I pay $665 rent and no utilities because that is ALL I can afford to pay. I am living with my brother on a temporary basis to try and get myself on my feet to get my own place. My own place, will cost somewhere in the $1200 - $1500 range. My brothers place is $2500/month, by comparision."

That's fine, but do you understand that you cannot take exemptions for things like utilities if YOU DO NOT PAY THEM. My attorney told me to make sure to bring copies of my utilities to the 341. You have no proof of paying utilies, so you are going to find it hard to claim them.

5. "My bike isn't really the problem. I could get out from under my bike... but it's my car... how can I possibly get out from under it? No one I know has the money to loan me, and I sure don't have the credit to get a loan (last I checked my FICO was 533)."

Then DO IT already. That's $300 plus a month in savings. Get rid of it yesterday.

6. "So, yes, you are right... RIGHT now I am okay... but I will NOT be okay... It is inevitable that I will need to file in the very near future, so I am trying to find a way to do it now to save myself the stress of trying to do it while truly struggling."

It's not inevitable. That might be how you feel, but it's not. I am willing to help you if you want help. If you want an easy way out, go see a lawyer and let him tell you that a 7 won't happen.

7. "Also, about the eating out thing... the room I rent is a convereted detached garage... I can use the restroom, and shower. I have access to the kitchen, but my initial plan moving in here was to be very temporary... I told him I would just eat out while I was here as I only expected to be here 2 months... well it's been 5 months now."

What does a temporary plan turing more permanent have anything to do with using the kitchen? You are trying to use so many excuses, you can't even remember which ones to use. A great suggestion in a post above, get you a little dorm fridge/microwave. Eat ramen noodle and mac and cheese. We've all done it before. Your decisions to buy motorbikes and rally cars have you in a jam, so you don't get to eat out three times a day everday. Try peanut butter and jelly. My stupid real estate decisions had me eating a bowl of Cheerios for dinner at times, it's not fun but you when you make your bed, you get to lie in it. I sacrified because I was not going to let my stupidity cause my wife and kids to suffer.

8. "I do go out and buy some food here or there, but with my kind of work, it's hard to not go out to eat. I work at a big company where we go out to lunches with vendors and clients all the time... I am pretty much REQUIRED to eat lunch out when I am at work. Dinner I usually eat out... Breakfast I eat at work because it's only a few bucks, and I get up really early and don't want breakfast right when I wake, so I don't eat at home."

Sorry but I call them like I see them. HUGE @$$ EXCUSE! No one is REQUIRED to eat lunch at work and pay for it. If it's lunch with clients, your company needs to pick up the tab. So on top of accouting mistakes they want you to take their clients to lunch. I am really towards that new job thing now. Breakfast needs to be a pop tart or cereal, not a few bucks a day.

9. "On-top of that, my pay is going to be cut in about 7 months. My boss warned me 4 or 5 months ago that "within a year we will have these guys trained so you don't need to be on-call anymore"... that means I don't get all the over-time I've always got. That over-time is about $900 pre-tax each check... Imagine what that is going to do.

I look at those things coming in the near future, and I fail to see how I will make it... It is why I am rushing right now and trying to get myself into a vastly improved financial situation... so I can handle those hurdles ahead."

You keep adding things to the situation. So let's see, this company wants to cut your pay from $6000 to $4200 a month and they want a $1000 off the top to correct their mistake. Strike 3. I'd add looking for another job to your list of things to do along with dumping the car, the bike and going to the grocery for bread and bologna.

Now, all of this said......once the pay cut comes down the pipe and they indeed start robbing you of $1000 a month you may very well qualify. Start paying your brother with a check every month for your records.

I spent 30 minutes on this, so you don't have to like it but understand that I am passionate about this because I would love to help people avoid the same mistakes I made.

Good luck brother.

[debtprison]

You make $6093 per month?

Count your blessings. I make less than 1k a month and have almost the same amount of debt as you. Sell some of your assets and liabilities and save your money and pay your debt down.

[adviceplease]

Wow I wish we made that much, we bring home at least $3000 less with a family of 3 and a mortgage. I thought our cars were bad with $12,000 owed on 2. OP you may want to wait until your income reduces and go from there. We have a car that we really do not want to go back but if I owed that much I would let it, and you need to get your employer to lower the payments on what you pay back a month they messed up so they need to work with you on it.