Did I just find a solution in filing separately??

[mom2crazies]

Thanks to everyone on these boards. I have been searching threads and came upon some information. I am wondering if I just found something that will help me.

Right now, we are filing jointly. Although, the main reason we are filing is because of a house that was in my husbands name that was foreclosed on (I was not on the loan).

He has one credit card only in his name and I have a couple of credit cards and some medical bills, but nothing astronomical (We just can't afford to pay the 52K judgment from the mortgage company back in a lump sum because they refuse to settle!)

The issue with filing jointly is that I have to include my SSDI and my children's SSDI income and it is showing a disposable income on the schedule I that could get a chapter 7 case thrown out (even though we qualify under the means test), and make for a hefty repayment plan.

I just saw a thread where someone brought up line 17 on the means test:

If you are married, living together, but filing singly:
Enter the portion of your spouse's income that was NOT used for your support
or the support of your dependents:

Luckily, I keep my SSDI completely separate from his finances (I also keep the childrens SSDI separate). I could potentially claim most of it or all. This would qualify him again under the means test, but what it would also do is make it so we could list my credit card and medical bills as expenses, where we are not able to right now because we are filing joint. This would decrease a repayment plan, substantially.

Also, because SSDI is not garnishable, I could (theoretically) not pay my debt and not have to worry about judgments or garnishes from it. (not saying I will)

The issue that I see is IF he is granted a 7, he has one car solely in his name and our van is in both of our names. Both are paid off and both are worth about the exemption amount that Utah allows for a vehicle. Filing jointly, they would both probably be safe (Utah allows you to double the exemption for joint cases). But, if he files - what does that do to our van (which is the vehicle that I drive and use for the kids)? That could make him over the exemption amount by about $1,000-$1,500 (subtracting 1/2 of the vans value that I would still "have")

[shark66]

I'm not a Ch. 7 expert by any stretch of imagination, but it seems to me that your train of thoughts is a correct one...

When it comes to the van, in the worst case scenario your husband would have to "buy back" his half from the trustee. They will NOT take the vehicle away because by doing so they would have to pay you half of the money since it's owned jointly. If it's not a newer van, there's a good chance that the trustee will abandon it altogether, but don't count on that just yet.

The only other possible caveat is if you have any joint debt. Once your husband (hopefully) gets a discharge, the creditors could come after you for the full amount.

My $0.02 only...

Good luck.

[mom2crazies]

Luckily, we don't have ANY joint debt! The home was solely in his name and in Utah, when a first forecloses, the second automatically turns into an unsecured debt (which is what originally screwed us, but maybe it will save us in this situation.)

It is his insurance on our medical bills, but I am the one that they send the bills to because they were for my procedures and hospitalizations.

[outsidetool]

I filed individually, my wife did not back a few years ago. Situation a little different: house in her name only and not at all behind. Only me with a pile of debts. Had only one joint auto loan on car that my wife mainly used ("my" car was financed under my name only). To make a long story short: Our joint income put us way above the means test. But put down EVERY legitimate expense...including expenses which my non-filing wife had, such as her own credit cards, birthday gifts, etc. Yes, the trustee was not happy. Buy my wife made it very clear to everyone that she did not file and was not going to be watching her paychecks go to pay my debt. It all worked out in the end; and we are in Utah also. Helped to have an atty that was willing to take a stand.

[mom2crazies]

outsidetool -

This is good to hear. Utah seems to be very strict in bankruptcies! Were you able to file a chapter 7? How did they figure your household expenses? Did you have to claim less expenses because she didn't file? My husband pays all of our household expenses. My money is...well, my money and none of the household expenses come out of my checking account.

[outsidetool]

I was able to file a chapter 7. However, I went to several attorneys who initially told me that I would "have to" file a 13 due to my wife and I being "over the means test." Finally found an atty who actually right up front started talking me in to filing the 7. We did not "reduce" any expenses for the bankruptcy filing. We gave the court a realistic accounting of money coming in and going out. My wife was anti-BK filing and refused to file with me, though she had a good amount of unsecured cc debt herself. So the budget obviously had to allow for her to make reasonable payments on her cc debt. She also refused to be "pulled in" to my bk; she made it clear that when it was x-mas time, birthdays, etc. that she would continue making the expenditures that she normally did. In other words, such things had to be accounted for in her portion of "household income."
The trustee did NOT like my version of a budget. There was a motion to dismiss based on abuse. They wanted my wife to lower her tax witholding. My wife made it very clear that she "did not file" and was not interested in cooperating; and since I individually did NOT have enough income to fund a ch 13, she was not going to be the financier of my poor money decisions. This whole issue did create significant stress in our relationship. In the end the ch 7 was approved--the only option was force me into a 13 that could not pay for without asking my wife for money each month. She made it clear that wasn't happening. Now obviously this may not all apply to your situation; but perhaps some aspects may help you out. Good luck!

[october99]

I believe your thinking is right on the mark if all the debt is separate. I am filing an individual bk and leaving my spouse out of it. His non-contributing expenses help me pass the means test and offset our income quite well for expense purposes.

While I understand both sides of the argument, it really is quite absurd the way it is handled IMO. I recall reading the archives of this forum from a member that was quite outspoken about the absurdity that filing bk would require that a spouse pay for debts that they are in no way liable for otherwise. If the creditors cannot sue or garnish the spouses wages for the debt then why should they have rights to it otherwise?

[mom2crazies]

Just an update: We decided to file joint. We figured if the trustee and judge were going to be tough, they were going to be tough, whether or not he filed alone. Plus, even though the medical debts are in my name, they could still come after him if I stopped paying on them, but he wouldn't be able to add them into the bankruptcy because they are under my name.

I am hoping we made the right decision. It was a very hard one to make, but we figured either way it could turn out bad and we may as well go for the one that would be most beneficial if it worked out. It's funny how SS, which is supposed to be exempt, is actually really hurting our case and if it happens, will be the reason that we are forced to convert to 13 or end up in a high payback plan.