Just met with lawyer and have some questions!

[irb]

First of all I am so thankful for this forum! The info on here is just amazing. I have learned so much over the past 2 weeks. So here's where I'm looking for some help....

The lawyer that we met with gave us 2 separate filing scenarios to consider. Some real quick background. We're over on the Means test, but our estimated DMI is definitely negative.

Here are the options:

1. Since the credit card debt is primarily in my wife's name to just have her file a chapter 7. We do have a credit union loan (approx $2500) and one small credit card ($500) in both of our names. Separately I have about $800 in credit card debt. My credit would still be good since I'm not filing.

2. We have a 2nd mortgage and believe that we're under water on the 1st to begin with. The lawyer advised us that as long as we got an appraisal and it proves we're under water that the 2nd mortgage of approx. $13K would be wiped out in addition to approx. $5000 of remaining debt that is either joint or mine.

So, now that I'm totally confused I'm not sure which way to go on this. The numbers that were thrown out there for the CH13 plan is that we would pay around $150 per month into the plan for 2 years and then we're done. Basically he said that the majority of that money would go towards paying him his total amount owed ($3000) and the trustee.

Now, I've only ever heard of 3 or 5 year plans discussed on here. But the lawyer said those aren't the only options. He said either way we decide to go it's a cut and dry filing.

Now obviously for the amount of debt to be erased the 13 is clearly the better way to go. I went into this thinking 7 was totally the best option based on my credit still being good and the fact that once discharged this whole thing is over with. Please, any opinions on this are appreciated. I'm so confused at this point!!!

[irb]

Please, if anyone has an opinion it would be greatly appreciated. I'm so confused at this point. I also have to make a fairly quick decision on if I'm going to pay my credit cards at this point. If we're doing the 7 then I have to pay on mine. I really need some opinions.

[newbie2]

Please, if anyone has an opinion it would be greatly appreciated. I'm so confused at this point. I also have to make a fairly quick decision on if I'm going to pay my credit cards at this point. If we're doing the 7 then I have to pay on mine. I really need some opinions.

My understanding is that if you are under the median, then a Chapter 13 is for 3 years, over the median it is for 5 years.

Since you have such a small amount of unsecured debt perhaps this is where your attorney is getting the $150 month, however the stripped 2nd mortgage then becomes unsecured so I am confused...

I'm missing something here, and I'm wondering if you're missing something also. I would certainly make sure it is all clarified by your attorney before you sign any papers and file the petition.

[StartingOver08]

Just a note for you, all of your CU debt is cross collateralized. Look at your original note for the loans and the papers you signed when you opened your share accounts.

The reason I am bringing this up is under option #1 you have a $2500 loan and $500 cc under your wife's name and a $800 cc under your name, as it appears in the post. If just your wife files BK and assuming, correct me if I am wrong, that the $2500 and $500 are her accounts only, the CU can still close your cc account. They will do that if any share member has caused a loss. So check into this carefully before you decide. CU's are not very forgiving.

Also, there are members here that have removed the second mtg after a Ch 7 discharge. Search here to find those posts.

[irb]

Thanks to both of you for your replies so far. Here's some answers to questions that were raised. I said directly to the lawyer that I thought if we were over the median it's automatically 5 years. His reply was it's not set at 3 or 5 years and that we could go as low as 2 for the $150 per month. I'm thinking because our expenses put us at negative DMI that may be why we're not really paying anything back to the unsecured creditors and really only paying the attorney their fee and the trustee their fee. I think about $200 and some dollars was only going to the creditors.

I'm not concerned if my credit cards get closed. All that I have are a 2 store cards. My wife and I are both on the credit union loan and a credit card $500 from Care Credit. So are you saying that if just my wife filed the credit union could turn around and close my cards that have nothing to do with them? If just my wife filed we would still end up paying the credit union loan anyway since I also signed for it. So they wouldn't have any loss anyway.

Honestly I think I'm missing something as well. What this lawyer told me last night really threw us off the track that we thought we were clearly on, the CH7. If what he's saying is true then it really looks like the 13 is the way to go.

I haven't read a whole lot on the 13, but it seems like it's really restrictive for the time that you're in it and we wouldn't be allowed any savings. We made the decision not to pay the credit cards last night. We're going to have to wait about 60 more days until we can decide to file anyway because of a stupid decision that was made to pay for something with the card and then pay it back in June. That decision really pulled the wheels out from under us and wiped out our cushion on the cards that we used to get by each month. It was a real wake up call.

[SMinGA]

I only know of 36 or 60 month options also - strongly suggest you seek a 2nd opinion. The 2 year bit would make me nervous, and make me wonder if the other advice was sound. Would you care to list net income/expenses?

Are you above or below median income for your state and family size? Above median must do 60. Below median may do 36.

Your payment in a 13 is not based on your unsecured debt total - but your DMI. If you are at $0 dmi for a ch 7 that assumes you are still paying your 2nd. If you strip it in a 13, you no longer have to pay the 2nd so that payment goes away and increases your DMI.

If your wife files individually, you will still have to pay debts that are joint or in your name. The debts you listed are not great - $3800 in cards, $13,000 2nd. But you did not indicate your wife's debts or income/expenses so we don't know what else you're dealing with.

[irb]

We just met with a 2nd attorney to get some more advice. This one told us that he has heard of the 2 year thing, but he said in our case it would never get past the trustee.

One interesting thing that this one suggested was the possibility of my wife filing a chapter 13 and stripping the 2nd mortgage that way. This idea doesn't sound right to me either because both my wife and I are signed for the mortgage and home equity. So wouldn't they just leave the home equity attached to me anyway and we would still owe it just not in her name?

This attorney really seemed to want to push the chapter 13 option for us. He wasn't pushy as in we need to pay him now and file now. In fact he told us there's no hurry and that the credit cards will take awhile to get to the point of suing us so there's time. Overall I liked him except that when I told him we were over the median he really leaned towards the 13 without knowing our expenses.

He also told us that if only my wife is filing then things that I pay for that may be considered unnecessary won't be looked at and can be deducted from what is contributed to the household. The example was used like if I smoked expensive cigars. I assume the same theory applied to a chapter 7.

So here's basically where we're at. We live in PA. Median income for 2 people is $4464. If I continue working overtime (lawyer recommended that I stop) we are at approx. $6046. Without OT it will be approx. $5493.

I took the NOLA means test and it came out that we are -$490 DMI. I also should add that this number doesn't include a $150 home equity payment if we did a 7 because I couldn't figure out where it went on the means test.

More confusion!!!

[irb]

Well, I'm still on this journey heading towards bankruptcy and still have lots of questions swirling around in my head. We've met with 2 attorneys and I still question things that both have told us. With the 1st I question the 2 year ch13 bankruptcy plan, but then wonder if it would be worth it to take the chance with this guy since he came recommended by a friend that had a successful ch7 filing with him. I also question the 2nd attorney's idea about my wife only doing a ch13 to strip the 2nd mortgage since I'm also responsible for both mortgages. I'm starting to think that a 3rd attorney consultation might be a smart move.

I do have a question that I'm hoping some people can offer opinions on... My wife does Avon as a side job. Basically it's a break even to very little profit job. At most $50 per month is made. She basically does it to get the products at the reduced price and get them for her friends as well. If we counted the gas and time it takes to do all of this there would be even less than the approximately $50 made. She's been thinking about just quitting doing it and I'd like to see that happen as well. Our big problem may be the fact that she's never filed any taxes on this because it was so minimal. One reason for this is because when she started doing this the district manager at the time told her there's no reason too. We should have known better but we followed that advice. Now, I'm not even sure what to do about this issue before we get to the point of filing (hopefully by July or August) since I'm sick of the calls from the credit card companies already. The 1st lawyer said that we would have to amend our tax return and the 2nd didn't really seem concerned about it. We have a separate bank account set up for this. I am able to see what was deposited and then what was paid out to Avon for the bill, but other than that we have no records and she's been doing this for 2 years. Does anyone have any opinions on this or similar experience???

[ColoradoBell]

I don't know much about anything, but it seems to me that you can have a business that declares no income for about 3 years and take a loss on income taxres for those three years...whether you are allowed to just not file re the bus if it isn't making money...well, that I don't know, but a call to a tax accountant should answer that question fairly easily.

[ladyjenn]

Maybe I am confused now too! I thought the median was a yearly figure, not a monthly figure. This is what I find for 1/4 persons in PA

Pennsylvania $44,396 $53,572 $67,516 $77,590

[momofthree]

I'd certainly go to a 3rd consultation.

[irb]

Thanks for the replies everyone! Ladyjenn, yes you are correct on the median. I was listing the monthly median for 2 people so $53,572/12. I was off by $4 actually. Colorado Bell, good idea. I didn't think to just call a tax accountant and just ask. Maybe this 3rd lawyer will give us a clearer picture. momofthree, yeah I'm just not 100% comfortable with the two we've talked to so far. If I didn't read this forum so much I would have been quickly going back to the 1st one since his plan sounded so simple. But, I just don't see how that's even possible with the things he suggested so far. I do give him credit for calling me back a couple weeks ago on a Sunday night just to see how we're doing and if we had any other questions for him.

[ladyjenn]

Thanks for the replies everyone! Ladyjenn, yes you are correct on the median. I was listing the monthly median for 2 people so $53,572/12. I was off by $4 actually. Colorado Bell, good idea. I didn't think to just call a tax accountant and just ask. Maybe this 3rd lawyer will give us a clearer picture. momofthree, yeah I'm just not 100% comfortable with the two we've talked to so far. If I didn't read this forum so much I would have been quickly going back to the 1st one since his plan sounded so simple. But, I just don't see how that's even possible with the things he suggested so far. I do give him credit for calling me back a couple weeks ago on a Sunday night just to see how we're doing and if we had any other questions for him.

I see about the median. I just never divided it by 12..LOL
Best of luck to you. I am in PA as well, tough times!!!!

[irb]

Thanks Ladyjenn, good luck to you as well. I'm on here reading daily. My wife is always asking me why I read so much, but I just want to know as much information as possible!!! Hopefully as I keep going through this process I'll be able to give back as much to this site as I've learned from it so far!

Some days this whole process just overwhelms me. I can't wait from some solid answers on what we're doing already.

[ladyjenn]

Thanks Ladyjenn, good luck to you as well. I'm on here reading daily. My wife is always asking me why I read so much, but I just want to know as much information as possible!!! Hopefully as I keep going through this process I'll be able to give back as much to this site as I've learned from it so far!

Some days this whole process just overwhelms me. I can't wait from some solid answers on what we're doing already.

I haven't slept more than 4 hours per night since we decided to file, and i think it is the "not knowing" part that is killing me. We want to have the lawyer paid off by the middle of July, and that seems like an eternity away. I just want to hear answers. I wish I wouldn't worry so much.
I also was on here daily and have learned A LOT! Some times it has freaked me out as well, and I have to take a few days break from it.