Chapter 7 Missouri Questions (Marital Adjustments)

[markinmo]

I have a few questions due to the recession I have had my pay cut in half and as of lately have not been able to afford my bills. I’m married have about $23,000.00 in debt in my name only not with my wife mostly credit cards, medical bills, and a store credit for our wedding rings with wells fargo. I have seen a lawyer in Missouri we gave them all of our information and took the means test we make too much money for that, I’m just filling separately our disposable income was around $400.00 according to the test which is not right my vehicle is always breaking down, there is always something that has to be fixed around the house like leaking water pipes broken causing rotted floors, and now we have a mold problem. We don’t go out to eat, go shopping, or anything like that we just don’t have any extra money and they want me to file a chapter 13 and pay $470.00 per month for 60 months which equals $28,200.00 + Lawyer Fees $1200.00=$29,400.00???? They say we are just a few hundred away in expenses from filing a chapter 7.

My job has slowed down big time in the last month and I have only been working one or two days a week even with this we are still over the median income for Missouri but my wife has a car payment $575.00, credit card debt 16k, and school loans 12k all in her name only, and has good credit mine is ruined. I have been paying the minimum on these cards for 6 years have not used in four years before we were ever married never to see the balances go down just paying interest and as of lately have not been able to afford to make payments we have a house that since we bought it is worth less than what we paid for it and I have an older truck that is paid for but not worth much. I don’t have any retirement or 401k any assets of any kind other than my truck.

I guess I would really like to file a chapter 7 which the lawyer told me was no problem when we first started after reviewing our bills and income and taking our $1200 and then saying it will probably be a chapter 13, there is no possible way we can afford $470.00 a month we will lose our house!

I went through the means test they filled out and had to redo and question several things, the income they put in was all wrong and I’m sure some of the other stuff was as well. I just feel like I getting robbed and they are always to busy or at court to meet up unless I just want to stop in and sign for a chapter 13, I’m going to demand I see someone tomorrow! My wife only makes the minimum payment on her credit cards and the balance barley goes down. If she where to pay say just 5% of the balance of here credit card that would increase marital adjustments in line 17 and make our disposable income basically nothing is that possible? Is there a limit on marital adjustments in Missouri? In addition my wife makes up 78% of our income this seems completely un-fair am I wrong in my thinking.

Sorry for the rant I am just losing my mind over this any help would be greatly appreciated. Thank you very much for reading.

[ValleYum]

This info sheet goes line by line explaining the Means Test entries: http://www.justice.gov/ust/eo/bapcpa...ne_by_line.pdf It can help you make sure your means test entries are correct.

I can tell you I understand how you feel. It is sickening and scary. The stress can make you sick - try to relax as much as you can. Easier said than done, I know.

You could get a bid for the mold remediation so that you could include it in your house maintenance on your forward looking Schedule J but there isn't a place for that on the means test.

Is there any way your income will dilute enough in a month or 2 so you can better file a Chapter 7? Hopefully you can hang in there until you can file a 7.

I hope others can answer your questions and reassure you a bit.

I wish you good luck.

[rdknipp]

If your income has reduced, is going to stay that way, and you can prove it (paystubs) - then you can rebut the presumption you are ineligible to file a Chp 7 by including the reduction as an expense on the other tab of the means test. Some of the expenses would drop a bit like your taxes. We use this a lot when the projected income on I is significantly lower than the means test income. How is your excess on I&J?

[markinmo]

Thanks for the link and the quick responses reading through that I read that spouse’s credit cards can be used as long as they are not being used to pay any bills it is just debt from several years ago, also she only puts $25.00 a week into her 401k which she should be able to put more into and she should be able to pay more than the minimum on her credit cards or the balances will never go down.

I know for sure I will not be working again until at least the middle of March and that’s what I based our income off of, if I filed March 1st.

I guess one question would be if she where to increase her credit card payments and 401k and I file in two months will that look bad it’s the only way she will ever get out of her credit card debt otherwise she will be paying them off forever at a minimum payment and by doing the math she is entitled to do so seeing as she makes up 78% of our total income.

I will also look into getting an estimate to have the mold issue fixed it just has not been on the top of my list, thanks for the suggestion.

They filled out form B22A official form Chapter 7 and marked the presumption arises and for the life of me I do not see section “I” or “J”. Also I only made $22,000.00 this year well below average for a single person.

[ValleYum]

I = http://www.uscourts.gov/uscourts/Rul...006I_1207f.pdf

J = http://www.uscourts.gov/uscourts/Rul...006J_1207f.pdf

[rdknipp]

I and J are not part of the means test. The means test takes the average of your past six months income with your actual projected expenses or IRS standards to determine your disposable monthly income. Schedule I (income) and Schedule J (expenses) are your actual projected expenses, and are a couple of the schedules you have to include in your bankruptcy filing. To file a Chp 7 you have to show that your disposable income on the means test is low enough - but you also have to show that you do not have any excess income on your actual/projected income. When you project your schedule I income, it will be what you expect to make going forward. If its significantly lower than what your income is over the past six months, you can use that difference as an expense on the means test to rebut the presumption created from the means test.

You may want to get out of the mentality of her income vs your income. You have one household and with the exception of the marital adjustment and certain creditors listed, all of the calculations would be the same if both of you are filing - which if her credit cards are a problem, you should at least consider - it should be the same price.

You (and wife) have two vehicles - one with a loan against and one without - the one without is over 6 yrs and 75k miles? If you have your means test, how many vehicles are you taking on the ownership expense, and how many are you taking on the operating expense (and what is your operating expense $$$ amount?). The law has recently changed in this area

[markinmo]

It would not be in my wife’s best interest to file the field she’s in things such as bankruptcy are looked down on severely and could harm her in her career. My income will be much less in the future than it has been in the past. We have two vehicles one in her name and her name only which she is paying for and mine which is 14 years old and has 190k miles and is paid for.

Operating expenses exceed more than $400.00 a month for both of us between the high cost of gas and repairs and up keep on my vehicle. Section 22A is selected with “1” expenses are $210.00 per month as shown on means test; also ownership of only my vehicle is stated.

Thanks for all of the help, I very much appreciate it.

[rdknipp]

FYI - The Supreme Court recently decided that you cannot take the ownership expense ($496) unless you have a monthly payment on the car. That's a problem for you. It leaves you with two options. One, due to the age and mileage of your vehicle, the IRS allows you to take an extra $200 a month for operating expenses. In other words, you would have to delete the $496, but increase the $210 to $410. That's a negative change for what you are wanting to do, but you can no longer do it the way you currently have it setup. 2) You could look to either finance a car or get a small loan on your existing vehicle (thus illustrating the absurdity of the court's decision in Ransom).

I'm assuming you are taking the $575 for the car payment on marital adjustments...anything for operating expenses? We normally list NFS' car on schedule B and that its your wife's car (this allows you to take the $496 ownership and $210 operating for a 2nd car off the means test - instead of the $575 for the car payment). And technically it is your property as you'd have a marital interest. But you could try also taking an operating expense off the marital adjustment for your wife. Someone else would have to weigh in on that. Generally when I have a NFS I only include items in the marital adjustment that have no other place on the means test - student loan payments, credit card minimums, gym memberships..

Do you have a 401(k) or IRA that you could contribute to? If you aren't filing til March 1st you could start. The UST in Missouri generally doesn't object to a 3% (sometimes higher) deduction for retirement accounts. Though if you are deducting a high percent for your wife on the marital expense that might not fly. Remember they look at your household as a totality of the circumstances.

[markinmo]

I am not working now and will not be until at least next March-April I don't have an IRA or 401k to contribute to, being as my credit is horrible it would be near impossible to get a loan or finance a car unless I went to a place like "Title Max" or payed some insane interest rate on a used vehicle. My wife only puts about 1.5% into her 401k per month, would paying more than the minimum on her credit cards be allowed in marital adjustments? It looks like the only deduction I have for my vehicle is the $210.00 per month in 22a both 22b and 23 are empty.

Thank you for all the great advice, wish my lawyer was this helpful.

[rdknipp]

The title loan issue is an unfortunate consequence of the recent supreme court decision. It may be necessary to get a very small loan at a high interest rate to qualify you for a Chp 7. It is my understanding that if you file with a $496 ownership deduction on a vehicle that you do not owe on, the UST will object.

To be honest I'm not real sure on the credit card issue. If it came down to it I'd want to get there without using more than the minimums as a deduction. My boss always likes to say when a pig becomes a hog it goes to slaughter. It sounds like you have room to get creative in other places (increase car expenses, 401k deductions, lower income). But ultimately if you need to take it to get there then do and be prepared if needed to argue - sooner or later she's going to have to pay more than the minimums to pay them off. The trustee might try to argue that you shouldn't be allowed to avoid paying your debts so that she can pay hers. If you lose then you might have to go the 13 route. It seems like you really need to sit down with your attorney and go over all the income/expenses - which from the sounds of it you are trying to do.

Surely there are some other folks on here who have had to claim more than minimum deductions on a NFS marital adjustment and can weigh in with their experience???

[rdknipp]

Is your wife making her student loan payments? Did you include that in the marital adjustment?

[markinmo]

They are $200 a month and in the marital adjustment We would most certainly have a DMI of less than a hundred dollars if she was able to put 5% into her 401k and pay 5% of her credit card balances a month. The idea of a loan on a used vehicle not a good idea? I don't see paying 5% of a credit card balance a month unreasonable? Is 5% contribution to 401k high? If I had a loan on my vehicle would the amount be $496+$210 or just the $496 per month plus the added cost of the car payment? Sorry for all the questions.

I really appreciate all your help very much.

[rdknipp]

Since her retirement would have to cover both of you I doubt that 5% would raise an objection - but she has to actually be contributing it. In other words she would have to change it very soon so it shows on her paystubs.

Again I would hope someone else weighs in on the credit cards, but 5% is definitely not unreasonable - so probably wouldn't get objected to either. Hard to talk in definitives though because they really do evaluate things from a totality of circumstances standpoint. You need some face time with your attorney.

A title loan on a used vehicle is a horrible financial decision. I understand that. But if you need to take the ownership expense (the $496 deduction on the means test right next to the operating expense) you must have a lien on the vehicle. The Supreme Court decided this recently. Here's a link with a decent explanation. http://www.scbankruptcyattorney.com/...-court/2011/01 It is very likely that when you met with your attorney that was not the case. However, now if you file with a dmi of around zero and take the ownership expense on your old paid for truck, you will get objected to and most likely forced into a Chp 13. I listed the two options you have (extra operating expense or lien on the vehicle) above.