Drowning In Debt - Need Help

[BBW]

We'll I have been visiting this forum for the past few months and this post marks my acceptance that filing chapter 7 will be inevitable. For those of you who don't care to read my 100 page novel, I have made my questions BOLD. Thanks.Do I have to take the means test and have less than $160 per month left at the end of the month if I make less than the states median income?

Should I get rid of my car and buy or lease another one? Like I said it’s underwater, and it also needs a timing belt, brakes, and tires this winter. Which is going to cost about $2500 (that I don’t have). So I’m thinking I should put it in the BK and lease a car before I file or have my parents sign a lease or loan after I file. Also, I live in an apartment in my parents house. I have made a rent payment to my mother for years. The amount increased slightly each spring. Do you think a trustee would have a problem with my rent since it is to my mother?

I currently have an out of court custody and support agreement with my EX that we created. We both share custody of our daughter and I pay her $520 per month for support. Do you think a trustee would have a problem with this payment since it started less than a year before filing and is not court order support? I write child care on the bottom of the checks.

I have always declared my daughter as a dependent on my taxes and she lives with my some of the time. Does that make me a family of two? If so I’m a little under my states median income, even prior to a pay cut. I also pay for my EX’s car insurance because my parents started to pay mine, would that be an allowable expense? I assume no.

I stopped using most of my cards in june/july except for one card I intend to keep which i stopped using early sept and completely paid off ($700) this week. I only have enough money left to file ($2k) and I am wondering how soon can I file? Do I have to stop paying my minimum payments or can I pay (if possible) right up to filing? Is there a certain number of months I should continue to pay after I stopped using the cards (I believe I read on here 90 days)? I am current on all my cards and have never had any negative info on my credit report. I was thinking if I file with a 700 score I would come out with a score in maybe the 500s after discharge compared to filing with in the 500s and being discharged in the 300s. Credit is very important to me and I want to have a good score again in the near future. While I don't want to see a credit card ever again. I want to be able to get a low rate on future cars and I'd like to buy a house in the future.

I have been working very hard for the past 4 months to debt my budget balanced so I wouldn’t have to file and I am currently only about $100 negative each month. But with AMEX raising my rate from 10 to 15% next month and my company reducing my pay/hours I feel I have no choice. Sorry for writing a novel and having so many questions in one post. I would appreciate any words of wisdom and/or answers to my questions. Thanks.

[BBW]

I know my post was really long but does anyone have any feedback?

[HHM]

Do I have to take the means test and have less than $160 per month left at the end of the month if I make less than the states median income?

No, but you still must disclose your actual income and expenses on Schedules I & J in your BK petition, if those schedules show an ability to repay, then you might have a problem.

[liz417]

We'll I have been visiting this forum for the past few months and this post marks my acceptance that filing chapter 7 will be inevitable. For those of you who don't care to read my 100 page novel, I have made my questions BOLD. Thanks. Hi and welcome to this forum. Thanks for asking the questions in Bold, it made it a lot easier to go back if I needed any additional info Do I have to take the means test and have less than $160 per month left at the end of the month if I make less than the states median income? Go to this site and plug your numbers in, it will tell you if you qualify for a ch 7 or ch 13: www.legalconsumer.com The look back period will be the prior 6 months, so you will want to use your lowest income possible.

Should I get rid of my car and buy or lease another one? Like I said it’s underwater, and it also needs a timing belt, brakes, and tires this winter. Which is going to cost about $2500 (that I don’t have). So I’m thinking I should put it in the BK and lease a car before I file or have my parents sign a lease or loan after I file. Also, I live in an apartment in my parents house. I have made a rent payment to my mother for years. The amount increased slightly each spring. Do you think a trustee would have a problem with my rent since it is to my mother? Don't get rid of anything yet, you may need the payments to help qualify you for a ch 7. Have you thought about purchasing a new/good used vehicle before your credit tanks? You shouldn't have an issue with the rent thing, as long as you can show that you are paying some sort of rent (receipt).

I currently have an out of court custody and support agreement with my EX that we created. We both share custody of our daughter and I pay her $520 per month for support. Do you think a trustee would have a problem with this payment since it started less than a year before filing and is not court order support? I write child care on the bottom of the checks. There shouldn't be an issue with child support, you will have to list it in your petition.

I have always declared my daughter as a dependent on my taxes and she lives with my some of the time. Does that make me a family of two? If so I’m a little under my states median income, even prior to a pay cut. I also pay for my EX’s car insurance because my parents started to pay mine, would that be an allowable expense? I assume no. Uhm, don't know. Someone will come along that can answer this question.

I stopped using most of my cards in june/july except for one card I intend to keep which i stopped using early sept and completely paid off ($700) this week. I only have enough money left to file ($2k) and I am wondering how soon can I file? Do I have to stop paying my minimum payments or can I pay (if possible) right up to filing? Is there a certain number of months I should continue to pay after I stopped using the cards (I believe I read on here 90 days)? I am current on all my cards and have never had any negative info on my credit report. I was thinking if I file with a 700 score I would come out with a score in maybe the 500s after discharge compared to filing with in the 500s and being discharged in the 300s. Credit is very important to me and I want to have a good score again in the near future. While I don't want to see a credit card ever again. I want to be able to get a low rate on future cars and I'd like to buy a house in the future. You don't get to pick and choose which cards you would like to keep, you have to list them all. I had a card with a zero balance and it was cancelled/closed within a month of me filing BK (I didn't list it because it was a card that I had forgotten about). If having a good Fico score is important to you, then yes, staying current right before you file will help.

I have been working very hard for the past 4 months to debt my budget balanced so I wouldn’t have to file and I am currently only about $100 negative each month. But with AMEX raising my rate from 10 to 15% next month and my company reducing my pay/hours I feel I have no choice. Sorry for writing a novel and having so many questions in one post. I would appreciate any words of wisdom and/or answers to my questions. Thanks.

You need to make a least 3-4 appts with local BK attorneys, they will evaluate your situation and give you the best advise/timing to file BK.

Good Luck!

[BBW]

Thanks for the replies.
Liz - I went to the web site you gave me and completed its tests. Does it go by my actual expenses or the IRS allowable expenses? It listed about $2200 as the monthly housing and utilities for my area. Yet I pay only $650. Using their number I had $ -1,546 left over at the end of the month. And using what I actually pay I have exactly $0 dollars left assuming I didn't change any of their expense numbers for my area (my car payment is higher and a few other numbers were higher or lower).

When I say get rid of my car, I mean get rid of it in the bankruptcy not prior. I have considered getting a replacement car before filing but I'm not sure if I want to put it in my name or my parents. Or try to just drive my current car for 3-4 months after filing but before discharge if they don't repo it.

Do I have to list cards with a $0 balance? I have one card from a small bank not a big credit card company that I hope to keep. Being small I am hoping they don't check your credit often.

Congrats on your recent discharge.

[BBW]

No, but you still must disclose your actual income and expenses on Schedules I & J in your BK petition, if those schedules show an ability to repay, then you might have a problem.

Ahh I didn't realize that. So whats the magic number I've read 110, 160, 180 depending on which thread I was reading.

[liz417]

Either way, you said that you have a (neg) number and a zero, so you should be fine. You will need to list your expenses on your schedules. You stated that some of your expenses exceed the IRS standards, which ones? If you take your monthly income and substract your expenses (not exceeding the IRS standards), do you still have a (-) number?

Once you file for BK, your car won't be repo because you are protected by an "automatic stay", your car loan company would need to get court order to lift the stay to be repo'ed. If you put the "new" car in your parent's name, you will NOT be able to use that as an expense.

You must list all creditors on your petition, I happened to leave out a Home Depot card I hadn't used in over 2 years. It still got cancelled. Who knows? I've read some poster's credit cards make it through bk...

[MrSmithster]

I have always declared my daughter as a dependent on my taxes and she lives with my some of the time. Does that make me a family of two? If so I’m a little under my states median income, even prior to a pay cut. I also pay for my EX’s car insurance because my parents started to pay mine, would that be an allowable expense? I assume no. Uhm, don't know. Someone will come along that can answer this question.

i was in a similar situation and claimed my son(2 person family), but he actually lives with me more than half the time(although i pay her $500 a month). if you are claiming her, yet she is not living with you more than half the time, you really cant legally claim her. so, if you then use her in you BK, i dont think that would be legal either, but thats up to you.

[BBW]

There aren't to many of my expenses that are higher than the irs lists except my car payment is a little higher, other auto expenses are higher, personal care, and out of pocket medical. After reading your replies I think my real concern is my car. Currently I'm at $0 or -1500 at the end of the month depending if they use my housing or the irs. That would mean it might be difficult for me to maintain a $500 per month car payment in the trustees eyes and I might not be able to keep it if I wanted to right? And if I did buy a new car it would have to be cheaper (which isn't a bad idea, but I drive a lot and my car is important. although it's not the most important). After doing some pricing my ideal replacement may have a slightly higher payment than my current car, which I'm sure the trustee wouldn't like which is why I would want it in my parents name, but then your saying its not an expense in which case I would have +500 left at the end of the month or -1000 depending on the number again. Oh so confusing... I guess if I wait for my pay cut I'll be negative no matter how you look at it. In which case why would trustee let me keep the current car or a new car?

MOST IMPORTANT QUESTION. When is the soonest I can file based on what I mentioned in my first post. 2 weeks since I made a preference payment. 1 month since I stopped using my cards. 3 months since last luxury purchase.
Thanks.

[BBW]

i was in a similar situation and claimed my son(2 person family), but he actually lives with me more than half the time(although i pay her $500 a month). if you are claiming her, yet she is not living with you more than half the time, you really cant legally claim her. so, if you then use her in you BK, i dont think that would be legal either, but thats up to you.

Technically she spends more hours per week with me. Her mother has her during the day and I have her nights while her mother works. I have her +14hrs a day 6 days a week. So I guess thats about half or more.

Does it piss you off that you "share" him, and have him most of the time. Yet you pay his mother? It pisses me off. Especially since I am on this forum and if I wasn't paying his mother perhaps I wouldn't have to be.

[MrSmithster]

yep, sure did. but i have less then a yr to go paying her(my son is 12). when i knew i had to file in the future, one of things i did was make her a deal. i knew she was in debt also. i paid all her debt off ($14k) and she agreed to only take 12 more months of support(yes, i have that notarized). that way i got her off my back forever(well, soon anyway) and could also use the support payments in my BK. and now after my discharge(just 10 days ago), i now have a true fresh start. i know this might not be completely honest, but was legal. and after what the cc companys are doing to us, i just really didnt care about their interests any longer and concentrated on mine.

[MrSmithster]

was it clear that i used a cc to pay her? if not, i did

[BBW]

I have a notarized agreement as well. But my attorney tells me if she takes me to court or I take her to court the judge can throw out our agreement and create a new one that the judge feels is in the best interest of the child. In which case couldn't you end up possibly paying support again for the next 9 years (maybe minus the 14k)?

Our agreement is I pay her $520 until next sept then it will go to $260. But it's driving my crazy just because I make twice what she does, why should I pay her when I have more debt and expenses and on the verge ok bk anyway???

Congrats on your recent discharge too.

[BBW]

was it clear that i used a cc to pay her? if not, i did

no but I was wondering how you had 14k in cash prior to filing, and how the trustee didn't notice it.

[MrSmithster]

I have a notarized agreement as well. But my attorney tells me if she takes me to court or I take her to court the judge can throw out our agreement and create a new one that the judge feels is in the best interest of the child. In which case couldn't you end up possibly paying support again for the next 9 years (maybe minus the 14k)?

i dont think so i my state. i went a lawyer for advise also. the agreement she signed states neither of us can ever pursue any claims against the other with regards to child support payments/alimoney, unless some new future development like medical or some such unusual circumstance arises, and then it only would only apply for him.

no but I was wondering how you had 14k in cash prior to filing, and how the trustee didn't notice it.

i payed her bills using my cc online over many months, at the same time i consolidated some other cc's, then waited over 6 months. know one asked. it was the only way i was ever going to make as my salary was cut by 1/3 and i had approx 6 mos. notice till decrease. my ex also makes less than me, and as my kids depends on mostly, it was all the more important to escape completely debt free. now that she is debt free, she is much nicer/happier and we actually get along real well now. 2 birds with 1 stone thing.