Attorney Says I make to much??

[blackroze]

Hello all,
Found this forum while googling and crying... My husband and I were schtooped into buying a house under a loan that was bad... Here is the thing long story short, we had an 804 credit score, but were talked into arm this, and arm that, and it is sooo much better blah blah blah.. Anyway, recently my husband employer gave us the option to move from Oregon to CA, or find another job. He makes about 70k a year, which is good in Oregon. So we moved, put the house up for short sale. We have been in CA for 6 months, the house sold for a delinquency of 122k. The banks are now coming after us. We were told by our second realtor "just file bk no big deal." Seems we have payed attention to, to much bad advice, so fast forward to today... We live in San Luis Obispo area, everything is pretty much 30% higher than Oregon price-wise, even our rent is more... So the bank wants their money, and we go see an attorney who says that I make to much money to file a Chapter 7 BK. I check out things online, and my wife and I total made $39,420 in the last 6 months. So I check the "means" test and it says we pass. Can I ask for some advice as to what I can do? Do I make to much? Based on our expenses, and a budget calculator we use, we are out a little over $300 per month. So we are basically robbing Paul to pay Peter each month to make ends meet... Thank you all.

[GettingGoing]

Hello all,
Found this forum while googling and crying... My husband and I were schtooped into buying a house under a loan that was bad... Here is the thing long story short, we had an 804 credit score, but were talked into arm this, and arm that, and it is sooo much better blah blah blah.. Anyway, recently my husband employer gave us the option to move from Oregon to CA, or find another job. He makes about 70k a year, which is good in Oregon. So we moved, put the house up for short sale. We have been in CA for 6 months, the house sold for a delinquency of 122k. The banks are now coming after us. We were told by our second realtor "just file bk no big deal." Seems we have payed attention to, to much bad advice, so fast forward to today... We live in San Luis Obispo area, everything is pretty much 30% higher than Oregon price-wise, even our rent is more... So the bank wants their money, and we go see an attorney who says that I make to much money to file a Chapter 7 BK. I check out things online, and my wife and I total made $39,420 in the last 6 months. So I check the "means" test and it says we pass. Can I ask for some advice as to what I can do? Do I make to much? Based on our expenses, and a budget calculator we use, we are out a little over $300 per month. So we are basically robbing Paul to pay Peter each month to make ends meet... Thank you all.

A quick search and it appears that you would be over the median income for CA if you have a family size 2 however there is a second part of the menas test that takes expenses into consideration. Personally I would go talk with another attorney. This one doesn't appear to want to take the time to determine if you would qualify for a ch7.

[blackroze]

The other part to this is that my wife brings in about $1200 a month in unemployment, because when we were "forced" to relocate she had to give up a 2k a month job. So her unemployment goes away next week, so all in all, cost of living is about 30% more, and our income will be cut by 2k a month. I know I make above the median, but when you "live" on x amount, then lose about 50% total it hurts. We would not even consider it if we just had to pay our other bills, but we can't afford to pay $122k... :-(

[GettingGoing]

The other part to this is that my wife brings in about $1200 a month in unemployment, because when we were "forced" to relocate she had to give up a 2k a month job. So her unemployment goes away next week, so all in all, cost of living is about 30% more, and our income will be cut by 2k a month. I know I make above the median, but when you "live" on x amount, then lose about 50% total it hurts. We would not even consider it if we just had to pay our other bills, but we can't afford to pay $122k... :-(

Like I said, you really need to go see a new attorney. There are people here that were tens of thousands OVER the median income for their state that qualified for a ch7 bk. Its all about expenses. A competent attorney can make it work. You can not give up just because one attorney didn't want to take the time to really look at your situation and see what best fits you.

[marie]

be very thankful you have found this forum, and read, read, and read some more.

there is a wealth of information here, and everyone is helpful and non judgemental. We are all going through this together

Good Luck, and keep interviewing attorneys !

[blackroze]

Thank you guys very very much!

[liz417]

I'm in Calif and was over the median too. My 1st attorney was ready to put me in a ch 13, no questions asked....skip to me finding this site and a year later, I visited 6 more attorneys (all but two looked at my income and said ch 13 only). Basically, it's all about your expenses. I would interview a few more attorneys, read up more on this wonderful site and go to legalconsumer.com to plug in your numbers.

Good Luck and Don't give up based on one attorney's advice.

[HHM]

Although it is true that you can be over median and file chapter 7, it is only in a very narrow circumstance in which that can happen.

So, let's not be giving too much FALSE hope here.

If you are over median, then they type of expenses you need to have are secured debt, or other "special" expenses (like medical). For example, if you have a high mortgage payment, then you might pass the second test. If you don't, you are stuck with IRS allowed expenses and will fail.

[blackroze]

So will they even look at the fact that I had to transfer with my job, with no raise, and try to survive in an economy that has a 50% higher cost of living? When I run the cost of living analysis, I need to make in the area of 150k in order to maintain my current lifestyle. Now I understand I would have to make some decisions to cut spending, but 50%!! Problem is, where I am from, there are no jobs in my field that pay as well...

[MrsDixon]

I was over the median in my state and I talked to about 6 lawyers who said I needed to file a 13. I kept looking until I found one that said he could get me a 7. I was discharged 20 months ago from a 7. Just keep looking and interviewing lawyers. In some instances UE income isn't calculated in the means test anyway. I know in IL there was some trick to it.

Try not to freak out too much and just keep talking to lawyers. Everything will be okay!

[blackroze]

One piece of advice we were given by the last attorney was to stop paying our Credit Cards and such... Is this bad advice? I mean because we did a short sale on our house, our credit went from and 804 to 690, so its pretty much shot... but if we cant file BK, why would we want to stop paying... All of this is very confusing.. :-) Glad we found this forum!

[feelingnutsy]

This is the first piece of advice that you'll probably get---stop paying them.

[keepmine]

The other part to this is that my wife brings in about $1200 a month in unemployment, because when we were "forced" to relocate she had to give up a 2k a month job. So her unemployment goes away next week, so all in all, cost of living is about 30% more, and our income will be cut by 2k a month. I know I make above the median, but when you "live" on x amount, then lose about 50% total it hurts. We would not even consider it if we just had to pay our other bills, but we can't afford to pay $122k... :-(

You are gonna need to plan your bk out.
First thing you do is stop paying those cc debts. Use that money for normal living expenses. Wait a few months so that your wife's income from UE starts to have less and less affect on the means test and then file.
You'll just need to put up with harrassing phone calls and letters from creditors for the time being. Just part of the drill.
Big thing is, don't panic. Set this baby up and file when the time is right.
You asked a question in another post about why your lawyer suggested you stop paying cc.
Two reasons. One, it's a waste of money if the debt is going to be discharged anyway.
Secondly, you won't have access to credit cards post bk for awhile. You need to learn to live on a cash basis.That's why I suggested you use those cc payments to fund household expenses.

[blackroze]

If I am not qualified for BK, would it be wise to stop paying?
Also, my Credit Cards are through the same bank as my checking, savings etc... Can they wipe all of that out to collect on the CC?
Thank you again!

[ecsclb1724]

how far as the mortgage company gone in trying to collect their money from you? Are they just calling, sending letters, etc. or have they gotten a judgment against you? Are you currently current on alll your cards?

Judgments take time to impose and then they would need to get a writ of garnishment to actually collect on their mortgage money, that would probably give you 3 months or so from the date that they first summon you. So if all they're doing is harassing you, ignore them.

If you're current on your credit cards, stop paying them. You'll have to deal with annoying calls but is youre going to file, why waste your money? Do not put the money into a big savings account because depending on allowable exemptions, it could be taken by the trustees. Instead, use the money to make allowable purchases, car repairs, home repairs, stock up on food or clothing, etc.

If your wife's unemployment is due to stop next month, would you then be under the median income? With a loss in $1,200 a month I would think that that could make a big difference. If would definitely help in passing the means test if you're over median and are trying for a Chapter 7.