Means test questions

[Diesel73L]

Right now my wife and I are above the median monthly income for our county in New Jersey (our credit card minimums are still killing us though), however, beginning July 1st she will be unemployed as she is a teacher and has lost her job due to budget cuts. She will receive her last check on June 30th and will begin receiving unemployment in July. At that point we will be below the median monthly income by about $800. I did read somewhere that your median income is calculated as a six month average though-does that mean we'll have to wait six months after she loses her job to file? Coincidentally, our daughter will be born about six months from now-how will that affect our median income since we'll be a family of three?

[shark66]

The question here is, can you afford to wait six months?

If it were me, I'd definitely wait for the child to be born, medical expenses can pile up really fast, and you don't want to file before that passes...a family of three with less income...sounds like a plan to me.

I'd also stop paying credit cards very soon...like yesterday...

My $0.02 only...

Good luck.

[Diesel73L]

The question here is, can you afford to wait six months?

If we keep paying the minimums probably not, but if the law says we have to what choice do we have? What I'm trying to determine is if that's actually the case.

If it were me, I'd definitely wait for the child to be born, medical expenses can pile up really fast, and you don't want to file before that passes...a family of three with less income...sounds like a plan to me.

We have insurance (thank god) through my job and it's not going anywhere, so medical expenses shouldn't be an issue.

I'd also stop paying credit cards very soon...like yesterday...

I'll see what my attorney says when I find one. I'm not sure that it's wise to "just stop paying"-won't that enrage the creditors and compel them to really come after you once you file?

My $0.02 only...

Good luck.[/QUOTE]

[shark66]

There is *no* law stating that you have to pay the minimums...where have you gotten that idea from?

Enrage the creditors...no, not really. Six months is a doable amount of time. You'll be just one of millions in default...

Medical expenses sometimes pile up even when one has insurance. Especially when a childbirth is involved. Better safe than sorry. ..

Good luck.

[daylate]

I agree with shark. if you are going to file-stop paying now on all credit cards. You will then be like 99.14% of the filers here. it will take the banks a couple of months to realize you are not paying, then they will start calling (some maybe sooner), then they will offer up a settlement plan or two -each one better than the previous. Finally they will probably send it to an outside collection agency. By this time 6 months should be just about be up. Shut off your phone or just learn to ignore it. Spend the extra cash to buy baby furniture, cover the cut in your wife's pay, get your car fixed, etc. Then when you file you should be in good shape as far as the means test goes. Check out the pre-bk planning thread somewhere in the stickies. Good luck.

[Diesel73L]

I agree with shark. if you are going to file-stop paying now on all credit cards. You will then be like 99.14% of the filers here. it will take the banks a couple of months to realize you are not paying, then they will start calling (some maybe sooner), then they will offer up a settlement plan or two -each one better than the previous. Finally they will probably send it to an outside collection agency. By this time 6 months should be just about be up. Shut off your phone or just learn to ignore it. Spend the extra cash to buy baby furniture, cover the cut in your wife's pay, get your car fixed, etc. Then when you file you should be in good shape as far as the means test goes. Check out the pre-bk planning thread somewhere in the stickies. Good luck.

I guess I'm still new around here because just stopping payment still sounds pretty scary. The calls worry me because I know they're not supposed to call third parties or your place of work, but they do anyway right? Having these people harass my co-workers and/or family members is not something that I think I can deal with. We are trying to keep this as quiet as possible just because of all of the negative connotation that a bankruptcy brings with it.

[shark66]

If they call you at work, tell them that you can't discuss personal matters on company time, and that they should call you at home, then hang up. They will eventually give up. Put the house phone on "do not disturb" and call it a day.

Family members...ha...once you file BK, that goes onto public record, and in many places gets published in local newspaper...you may try to keep it quiet and low-key, but someone might bump into that info anyway. If anyone asks anything, just tell them to pound sand...

Negative connotation...just get over it. Seriously. Anyone who has an issue with one's personal financial matters (which is what BK is) shouldn't have a place in that person's life anyway.

My $0.02 only...

Good luck.

[debee]

Coincidentally, our daughter will be born about six months from now-how will that affect our median income since we'll be a family of three?

The median income for a family of two in NJ is roughly 70K and for a family of three it goes up to roughly 85K.

Just because you're over the median income doesn't mean you can't file a chapter 7. Have you run your numbers through a Means Test calculator? If your income is over the median, you go on to the next part(s) of the test and so long as you pass it you can file. The next hurdle is your schedules I & J which are your income/expense numbers. This second hurdle exists whether you're above or below the median income.

This link takes you to Nolo's means test calculator where you just plug in your numbers: http://www.legalconsumer.com/bankruptcy/nolo/

Your soon-to-arrive daughter will not only change your median income, but also add allowable expenses on both the means test and schedule J. You can experiment with the figures on the link above. They actually enter the predetermined amounts allowed for food, housing, etc based on your family size and county.

Sometimes a family finds itself very close to passing the means test, but not quite there and just by going over old records they find forgotten expenses, or they remember to lower their insurance deductibles and increase coverage, or get term life insurance on the adults in the family, etc - all allowed expenses which turn a fail into a pass.