Higher Income Bankruptcy

[kphipps34]

My husband and I make approximately 111,000/year. I have over 50,000 dollars in credit card debt, 24000 in repo cars left over, and a 43000 garnishment for a Heloc on a foreclosed home. I also have 50,000 in student loan debt. We moved to Georgia 4 years ago and got into a mess with a mortgage company scam. (Thank you CountryWide) Had to file chapter 13 to avoid foreclosure. We let Chapter 13 get dismissed because the mortgage company finally remodified our loan and the trustee increased our payment to Chapter 13 from $1000 a month to 2900 a month. (impossible amount) Now 2 years later I am stuck with all this debt and cannot begin to pay it. Just started with a garnishment of approximately 1200 - 1500 a month for the HELOC. I have a husband, 3 children, and my parents live with me and my sister who takes care of my elderly parents. Between groceries, gas and utilites there is not enough money for a chapter 13. But of course every lawyer I talk to tells me I don't qualify for a Chapter 7. I see no way out of this debt and I am afraid since I stupidly have one garnishment that other debt collectors will follow. Is there anyway to file a chapter 7 with a income above the median income. I can't seem to find a lawyer that will take the time to even consider chapter 7 for me. As soon as they see my income they immediately go to Chapter 13 and say my payment to trustee would be 3000 a month. How do these very wealthy people wipe out their debts and start over.? Is there anyway to stop the garnishment? It is really putting a hardship on my family?

[discombob1]

I have no wisdom to offer you since this is way above my head. What I can say is for what it's worth you are in my prayers. If there is anywhere to get the info you need, this is it. One of the gurus will be along shortly. Hang in there and good luck!!

[tobee43]

we made more......and filed a no asset chapter 7.......you need to get yourself another atty.......it's all relative....our income was high, however, it should be based on you DMI......

we saw at least 5 attys before hiring one........and most demanded we HAD to do a 13........since we were surrendering our house and car....there wasn't any assets left for them...and as far as our income, it was taken from medical expenses...etc...

i would get a few FREE consults about your situation.

[Jacey]

I was well over median but passed the means test based on expenses. Find the form online or do the Online test (someone else chime in and provide link...I forgot it). If your mortgage paymens are big enough and you have other obligations as specified on the form, you may qualify for a 7. I had lawyers say 13 automatically when they saw my income, but that is only half of the test. Good luck and let us k ow how the numbers work out.

[KCane28]

I went through the same situation as you. The 1st Atty I saw took one look at my paystubs and wouldn't even talk about chapter 7. The next atty I saw said she had to run numbers and after she did that she believes we qualify. At least she said she is going to fight the Trustee first. Keep looking and make them do the means test at least.

[Jacey]

Here's the link: http://www.legalconsumer.com/bankruptcy/nolo/ . I worked this out a hundred times after I was told no by my first attorney. I was prepared for my second attorney meeting with a completed means test, and he took me seriously. Just follow the links to the IRS allowances as you complete the test...you can't print it out in any usable format that I could figure out, but I printed a blank form 22A and filled it in as I went. I had to redo this a million times making sure it would be okay as pay changed, expenses changed, etc...that was only because I delayed filing a couple of times.

[laurannm]

Agree with everyone else, keep scheduling free consults with lots of attorney's. We were in the same boat you are, about $10k above median (around $105k annual) and just about every attorney we talked to immediately wanted to throw us into a Ch13 based soley on income. We finally found an attorney who actually took the time to go over our situation (and even ran the means test at the consult to give us an idea of the direction we were headed) and had no issues with our Ch7.

Jacey makes a great point, fill out the means test yourself and bring it with you to each consult. I did the same and knew we could go Ch7, which helped us at the consults we went to

If you happen to live in MA send me a PM and I can recommend our attorney to you

[Pandora]

*sighs* Where do these attorney's come from that keep telling people "No Ch. 7 for you..income too high" ??! They should have their papers pulled and banned from practicing law ever again.

Means test is only PART of whether you can file CH. 7 - its the part that says whether or not abuse is present; so long as you fall within the criteria set forth by BK law, you can still file CH. 7 being over the median; DMI is the other half of it all. Why many attorney's base it off of income limits is beyond me...

Consult with a few more attorney's before you end up in a CH. 13 that you cannot afford.

ETA: also when you do the paperwork online that someone provided above - make sure you know if all other income will be counted (i.e. parents, sister, etc) since they live with you.

[tobee43]

*sighs* Where do these attorney's come from that keep telling people "No Ch. 7 for you..income too high" ??! They should have their papers pulled and banned from practicing law ever again.

Means test is only PART of whether you can file CH. 7 - its the part that says whether or not abuse is present; so long as you fall within the criteria set forth by BK law, you can still file CH. 7 being over the median; DMI is the other half of it all. Why many attorney's base it off of income limits is beyond me...

Consult with a few more attorney's before you end up in a CH. 13 that you cannot afford.

ETA: also when you do the paperwork online that someone provided above - make sure you know if all other income will be counted (i.e. parents, sister, etc) since they live with you.

your so right pandora...shoot..we could NOT believe that some of them were saying......ok...you can file a 13 until the unemployment checks stop.....then we'll need to convert...i'm seeing and thinking in my minds eye.....$$$$$ is all they care about....

and interesting enough, i have mentioned this in other threads, but in some counties here they COUNT your UI...and in others they do not. and that's how bad some of the advise we rec'd was....fact was in our county UI did NOT count...since it was temporary....while the next county over they counted it!! wow....what confusion.

we just wanted it to stop, and didn't want to ge into an 13 only to have to refile.....and thankfully we interviewed and found the right firm for us!...after 5-6 interviews! so i'm with you....see more attys......

[backtoschool]

Income over the median is not an automatic disqualifier for a chapter 7, but it will draw the attention of the US Trustee, so you will have to have very detailed documentation as to your expenses. The more you are over the median, the more your case will be looked at closely. Keep in mind that no expenses that are over the irs standards will be allowed without a fight. So if your mortgage is over the norm for your area, or you have higher food bills or utility bills, etc, that will be an issue with the US trustee. Also, no discretionary expenses will be allowed in your calculations. Your student loans will be considered discretionary because they can be put into forbearance during your bankruptcy.

Basically you need to have less than 150 dollars available each month to pay into a chap 13 plan when your expenses are figured out, and your expenses need to be based on irs standards, or be qualified with a very good set of arguments and tons of documentation. If you can meet these requirements, you can do a chapter 7 with the income that you state in your post.

[tobee43]

Income over the median is not an automatic disqualifier for a chapter 7, but it will draw the attention of the US Trustee, so you will have to have very detailed documentation as to your expenses. The more you are over the median, the more your case will be looked at closely. Keep in mind that no expenses that are over the irs standards will be allowed without a fight. So if your mortgage is over the norm for your area, or you have higher food bills or utility bills, etc, that will be an issue with the US trustee. Also, no discretionary expenses will be allowed in your calculations. Your student loans will be considered discretionary because they can be put into forbearance during your bankruptcy.

Basically you need to have less than 150 dollars available each month to pay into a chap 13 plan when your expenses are figured out, and your expenses need to be based on irs standards, or be qualified with a very good set of arguments and tons of documentation. If you can meet these requirements, you can do a chapter 7 with the income that you state in your post.

excellent point......and you MUST have all the paperwork to back it up. (i had to chuckle...without the UI our DMI was -3000...actually 2985 or so)....so we had no problem.

[SweetGeorgia]

A lot of lawyers don't do anything BUT Chapter 13's, I think. It's much better paying, and it's the path of least resistance (for the lawyer, anyway). There have been some very sad cases here in GA that should never have been 13's. Keep looking, and don't give up! There is a Google ad under your original post for a "rothbloom" firm which does "thoughtful Chapter 7 counseling." I don't know anything about them, but at least they say they do Chapter 7.

You are right that one garnishment leads to more. But if your employer is deducting the maximum amount (25% after tax) then at least that amount won't change. The deduction will be 25% whether there is 1 garnishment or 10. Unless it's tax debt or child support.

Watch out for bank account garnishments next. Stop direct deposit of your paycheck, and don't let cash sit there in your account. Good luck to you!

[tobee43]

SweetGeorgia, that is such excellent advise...and i so agree with you!

it appears to us, most ALL atty's wanted us in the 13's because they make more money from us...they didn't get the fact we will most likely have out lived our usefulness and will most likely never be rehired since we were upper management people...you can't go on what we USE to make.

we just kept on a lookin for a good atty, who understood our entire picture. and we went though a no asset 7 with no problems whatsoever.

[justbroke]

Actually, Chapter 13s are not as profitable as Chapter 7s. A Chapter 13 obligates the attorney for 36-60 months, and, generally, is only $1,000 more in average cost. If the Chapter 13 requires litigation, everything from lien strips to arguing with the Trustee over just what is an expense and what's allowed, then the Chapter 13 attorney really can make less than a Chapter 7 attorney.

The real problem is that there are Chapter 7 attorneys and Chapter 13 attorneys, although most will tell you that they do both. Some have a preference with one over the other. I think that the Chapter 13 attorneys have it relatively easier time dealing with the Trustee and hardly ever see the United States Trustee (UST).

As for the original poster (OP), I feel your concern. I don't have your details, but you should start your attorney search again, and open the question with I need a Chapter 7 attorney! Referrals are best when they come from family and friends, but I can understand the hesitation to open up that type of conversation with friends.

Unfortunately for you kphipps34, your original Chapter 13 attorney probably didn't setup your Plan correctly (for budgetary purposes) and your household size and expenses were wrong. I'd go visit some really good Chapter 7 attorneys and see if your budget is there. You are allowed to care for elderly parents! They are part of your household and you would also get the higher healthcare expense and can claim any extra healthcare costs. Just be wary that some "Chapter 7" attorneys -- who claim they are such -- will tell you that you're not a Chapter 7 candidate, by just looking at your income. It's not about your income. It's all about your "disposable income".

[tobee43]

really jb....because, i alway thought they as get a %...of at least that is what we were presented with by the atty's we went to...or at least that is what 3 or 4 of them made it sound. (or it's what i THINK i heard).

that during the 13 whether it was a 3 year of 5 year, part of what was distributed money monthly, would go toward their fees, whereas, usually, and i do understand a 13 is somewhat more complicated than that of a filing of the "general" 7 petition.

as well as hearing stories such as kphipps34.

all i know, for us, personally, and based solely on our situation, the mere thought sent chills to my heart. i couldn't deal with it well with a 13 and found the atty's opinions changed like the weather in oregon..

that being said, i have seen many success stories on this site with excellent atty's handling their cases, and for many it works well.

i agree the DMI is the key, and that's what helped us successfully complete our chapter 7.