Question about YTD Income and Assets

[UpaCreekinCA]

I had a meeting with my lawyer yesterday and he said based on my year to date income I won't qualify for Ch. 7 through the means test. I got a bonus for 2009 back in March or April which Uncle Same took 50%+ of which boosted my income. I can show justification based on paystubs what I net and the bonus is not guaranteed every year but is a "target". I can show last year that the bonus was only $1600. My salary is over the median income in CA but I have a $2700 mortgage and expenses to justify there is no money left over. Will this be a problem?

Assets: Going through the draft petition yesterday I let him know that I have some mattress money that was given to my dad a few months back so creditors could not attach it etc.. He said don't worry about listing it because our with our assets (other than furniture, clothes, TV, normal living things) our cars ('83, 2002, 2004) we don't have enough to be of concern. Does that sound correct?

[starr4law]

Hmmmm . . . any attorney that says that an asset need not be disclosed is suspect. If it belongs to you (no matter where it is), it should be listed as an asset. He is probably right about it being exempt anyways, but the point is that everything needs to be listed. In fact, you are swearing under penalty of perjury that you HAVE listed all of your assets.

I don't know how much you are over the median income guidelines, but if it isn't much, I'm very surprised that you wouldn't qualify for a Ch 7 because of the house payment amount. Perhaps waiting until the bonus is outside the means test lookback would push you back in. Also, all taxes paid are computed into the means test (when you are over the median income) so I am also surprised that since you paid so much in, that didn't push you back over to a Ch 7.

[lrprn]

Assuming this is the only attorney you've spoken with, you really need to set up 2-3 more free initial consultations with other experienced bk lawyers in your area. Any bk lawyer who would tell you during an initial interview that you don't have to declare "mattress money" when you file knows that isn't true.

Also you didn't say if this lawyer was a bk lawyer. I wouldn't file with a lawyer who is not an experienced bankruptcy attorney well-versed in the complexities and current case law in CA. I would steer clear using this lawyer to file if you can.

If you are close to the median income for your state, given the special circumstances you've mentioned (high mortgage, etc) that normally wipe out a great deal of disposable income, you need to give yourselves every chance to file a Ch 7 if you qualify. Your income can be over the median income for your family size in CA and you still may be able to file Ch 7.

Honestly, there's really no way to tell which chapter you can file until an experienced bk lawyer completes the Means Test and Schedules using your actual financial figures. It sounds like this lawyer gave you is his/her "best guess." You don't want to make such an important decision on somebody's "best guess."