Lawyer says I can't file chpt 7, I think he's wrong...

[johnnyp26]

I wanted to update the situation a bit and get some more opinions.

When we started thinking about bk I was in line to start making a lot less money (I am in the mortgage business), and I think we used a lower number than my 6 month average for the means test assuming that once it was time to file my income would have decreased significantly.

Well I have been out of work on disability for a while now, and with my tenure they were forced to pay me a 6 month average of my commissions before I left work, which is about $2,500 a month more than I would be making if I was still at work now.

Also when we did the means test, I had planned to keep our house and both of our vehicles. After meeting with the attorney a few times, and explaining our situation with both cars and the house, he advised we let one car go in the bk, keep one and let the house go (we are about $80K upside down, and have an adjustable rate starting in 3 years on the first, and a fully adjustable equity line). So knowing that it is unlikely that we would be able to refinance the house once the 1st mortgage was ready to adjust, we just decided we'd walk away from the home, as quite frankly we don't like the location of it at all. My son has special needs that require him to go to school a good deal away from our home, and it's become very difficult transportation wise with our house.

Fast forward to now, and I just did a mock means test online again, and it says we have about $2,500 in dmi. 2 of the biggest differences are we decided to let the one car go (570 a month for 5 more years) and the difference between our actual house payment and the standard allowance is about $1,000. We have no assets at all, but it seems like we are going to have to go chapter 13 because of our dmi. The problem is, if this means test shows we have $2,500 a month in disposable income, which we won't, then we're back to paying just about the same as we were before we started this process and not any better off. I just have no idea what to do at this point. I have no problem with doing the chapter 13, I don't expect a free pass, but just looking at this filing wouldn't solve anything. I am just so frustrated right now, I really wish my attorney had taken the time to look at the paperwork we gave him a month ago and tell us this. Any suggestions? I did send an email to a friend of a friend who is a bk attorney here for some advice, but haven't heard back yet.

[justbroke]

You need a really good consult with a very experienced attorney. I don't have all your financials so can't tell you what your hypothetical "disposable monthly income" (DMI) is or should be.

Are you keeping your home? If you are, then the "standard allowance" means nothing.

[johnnyp26]

You need a really good consult with a very experienced attorney. I don't have all your financials so can't tell you what your hypothetical "disposable monthly income" (DMI) is or should be.

Are you keeping your home? If you are, then the "standard allowance" means nothing.

We've decided we will not be keeping our home. It doesn't make sense with it so far upside down, and considering how far we travel to both work and my son's school, it just doesn't make sense.

[aljohnson007]

Anything you are contractually obligated to pay on date of filing can be claimed as expense. One strategy is to state you intend to reaffirm both cars and the house but you are not obligated to ever sign an agreement and even if you do, you can cancel it. This could end you in a Ch13 anyway but may be worth a try. JMO.

[justbroke]

Anything you are contractually obligated to pay on date of filing can be claimed as expense. One strategy is to state you intend to reaffirm both cars and the house but you are not obligated to ever sign an agreement and even if you do, you can cancel it. This could end you in a Ch13 anyway but may be worth a try. JMO.

This is true. It has been found time and time again that what's on the Means Test (Form B22A) is everything that you have contractually due, regardless of whether you are surrendering it.

However, the Trustee can pull the old "totality of circumstances" (11 USC 707(b)(3)) motion to dismiss out of their bag of tricks. In any case, if you do note a reaffirmation of those secured items (car and home) and are actually current at the time of filing... you could do as described.

I think the issue with johnnyp26 is that when they surrender the car and home, they show an actual positive DMI!

[johnnyp26]

This is true. It has been found time and time again that what's on the Means Test (Form B22A) is everything that you have contractually due, regardless of whether you are surrendering it.

However, the Trustee can pull the old "totality of circumstances" (11 USC 707(b)(3)) motion to dismiss out of their bag of tricks. In any case, if you do note a reaffirmation of those secured items (car and home) and are actually current at the time of filing... you could do as described.

I think the issue with johnnyp26 is that when they surrender the car and home, they show an actual positive DMI!

See when I just did the means test I excluded any debt that would be included in the bk. So I only put the car that we are keeping on there for debts. Should I have included the house and other card payments? And what about the unsecured debt, does that go on there too? It didn't seem like I could put any of that in there since we wouldn't be responsible for the debts anymore.

I wouldn't be as concerned about going chapter 13 if I thought there was a chance my income would remain the same, but I know that's not going to happen. I was actually looking forward to finding a new job away from the mortgage business since I could finally afford to take a pay cut.

[johnnyp26]

And also at the advice of our attorney I stopped paying on all debt except the car we intended to keep, so everything is now 2-3 months past due.

[justbroke]

Should I have included the house and other card payments?

Yes.

And what about the unsecured debt, does that go on there too? It didn't seem like I could put any of that in there since we wouldn't be responsible for the debts anymore.

Unsecured debt gets discharged and is not paid in the Bankruptcy.

[floridian]

my florida lawyer, says its very simple... i can pass the means test because all my income is disability, but over the median... i cant pass the DMI test and therefore will be converted to a 13..

[startingovr]

Where in Florida are you?

[startingovr]

Where in FL are you?

[floridian]

the jacksonville area...

[johnnyp26]

Yes.

Unsecured debt gets discharged and is not paid in the Bankruptcy.

Sorry, that was poorly worded on my part. I was trying to ask if the unsecured debts counted in the means test when they figure your dmi?

the jacksonville area...

That's where I am too floridian, if you wouldn't mind pm me the name of your attorney. I'd like to get another opinion assuming they have done right by you.

[OhioFiler]

And also at the advice of our attorney I stopped paying on all debt except the car we intended to keep, so everything is now 2-3 months past due.

What you indicate on your Schedule I as income is your CURRENT income, not your recent 6 month average. As long as you are not receiving the inflated pay package when you file you can claim your lower income on Schedule I.

I would recommend bringing the house and 2nd car current so you can deduct those expenses on your Schedule J. You can always do a ride-through on both and stop paying them after discharge. Once current you're a perfect candidate for a Chapter 7.

[johnnyp26]

What you indicate on your Schedule I as income is your CURRENT income, not your recent 6 month average. As long as you are not receiving the inflated pay package when you file you can claim your lower income on Schedule I.

I would recommend bringing the house and 2nd car current so you can deduct those expenses on your Schedule J. You can always do a ride-through on both and stop paying them after discharge. Once current you're a perfect candidate for a Chapter 7.

I asked my attorney about the ride through, because we were thinking of doing it with one of our cars, but he said that the trustees do not allow it.

I'll look into the income piece, as of Oct 1st my income decreased 30% so maybe that will help.