Debt to income ratio?

[tdgirl3258]

We are already planning to meet with a lawyer next week but I'm going to worry myself out of my socks until then if I don't get an idea about filing or not.

Our debts, if we don't include paying a payment toward a repossessed car, is about $1070 a month. That includes rent, food (for human and dog), clothing allowance, etc. but doesn't include saving any money. I am married but filing single since my wife doesn't work (disabled, but not on SSDI and unable to receive SSDI.)

My income, after taxes and deductions is $1470 so that would leave $400 left over each month.

The only problem is that some weeks/months work is slow and I only get 32 hours in, so some months I wouldn't have that $400. Also we are having to live with a relative, so that's the only reason we have that $400 left over. If we were to have to move out it would be more like $100 left for the month, if not less. But I doubt the judge would consider that, since at the moment I am getting in a full work week and our bills are our bills at the moment.

My question is, will it even be possible that a judge would allow us to file Chapter 7 if we could pay the debt back in 3 years (owe $12k)? Even though some months would cripple us if I'm only working 32 hour weeks or if we ever have to move out (which would put us on the street in that case.) My wife had a bad experience with a judge, so she is a bit paranoid about it.

[keepsmiling]

I cannot imagine a scenario in which your income would force you into 13.
Are you currently car-less? How do you commute? What do you do for medical expenses?
OTOH, considering the cost of an attorney-- have you attempted to settle? Usually not the recommended course of action, but it might be worth looking into if you could get a good settlement. I've been offered as low as 12% (which is, admittedly, rare)
You may not even make enough to be garnished, so perhaps there is no rush to do anything. You'd have to check your state rules for that.
In order to get your fresh start, it's important that you figure out a way to somehow increase your income.

[tdgirl3258]

No, we own a beater van and do not have any credit card or other debt except for the car repossesion from 2006, civil judgement in 2009 and garnished wages until I was laid off from a job that the company closed it's doors. We make enough for garnishment but when they do it's not enough to live on. That is why we need to file because they are about to file for garnishment at my new job.

As for medical expenses, we just deal with it. My wife is unable to go to the doctor, what's wrong with her is too expensive to treat without insurance. Debt is too high to settle, if we had money to settle we wouldn't be in this mess. And there is no way we can stay here at our cheap rent for the 3 years it would take to pay it off. Chapter 7 is the only way out of this mess.

Increase my income? If there was a way to do that without killing myself, I would have done that a long time ago. We live in an area where work is hard to come by, this week just happened to be a 10 hour work week and is hard labor, there is no way I could get a 2nd job. My wife has started making a few bucks doing what she can from home, but it's a ridiculously low amount to be of any help at all.

[keepsmiling]

Just went back and read the other thread.http://www.bkforum.com/showthread.ph...250#post593250

Did you double check the math on that garnishment?
and you are so far below the median that a 13 makes no sense. Any lawyer who can't get you into a 7 should have his license revoked.
Good luck, keep us posted, and get creative on that income thing. You only get one shot every 8 years. Believe me, I get it... we are pretty broke too.

[bookworm]

and you are so far below the median that a 13 makes no sense. Any lawyer who can't get you into a 7 should have his license revoked.
Good luck, keep us posted, and get creative on that income thing. You only get one shot every 8 years. Believe me, I get it... we are pretty broke too.

I agree with Keepsmiling. I wouldn't think you'd have any problem getting a 7. I was in the same boat when I filed. Our income is pretty darn low, but we've always, by personal choice, lived on such a shoestring budget that I was afraid we'd be forced into a 13. (Example: we live in a cheap apartment with no fancy amenities, we drive a fifteen-year-old car, we don't have cable TV, because I refuse to pay for television, we don't eat out, because I'm a kickass chef Of course, this doesn't mean we don't pay for high-speed internet or buy organic groceries, which are always more expensive. That's just how we prioritize our limited income.) But I digress...Every attorney I spoke to told me that my case was a simple chapter 7. I honestly don't think you have anything to worry about.

Talk to a few attorneys. That will give you some peace of mind. And if you find one you like, use the $400/month surplus to pay him in installments. Get the ball rolling to stop that garnishment and get on with your life.

[tdgirl3258]

Thanks. I became worried when I took the online credit counseling requirement (which is a joke, every information I read about is information I had already read about for free online elsewhere.) $25 for a sheet of paper is stupid. Anyway, it said we should only be spending $191 a month for groceries based on my income, for two people. We've lived on a noodle diet before, we are getting too old to go back to that. So that had us worried about reporting we spend almost double that per month for food alone.

I'm sure once we meet with the lawyer, our worries may ease. I appreciate the support though.

[tdgirl3258]

I had forgotten, my wife had posted that a few months back. We were waiting on tax to be able to pay the attorney and she worries as much as me. We were mistaken on what was owed, it was a letter that was dated in 2008 so it was much more than we thought that we owed, we owe more in interest than the principal balance now.

I'll let you know how it goes. Hopefully smoothly, as smooth as bankruptcy can get. We have really bad luck though, so will be holding our breath for a while until it's closed.

Oops, forgot to reply with quotes on, this reply was to keepsmilin.

[bookworm]

You're allowed more than a noodle diet. And $191/month sounds awfully low, even for two people (I claimed $540 for a family of three).

I can't post links, because I don't have enough posts (I used to be lotsahats on here, but for some reason my old username and password stopped working, and I couldn't reset it, because I deleted the e-mail account associated with it, so I had to create a new account).

Anyway, hopefully someone can direct you to the Department of Justice website, where they have information on means testing and state allowances.

[keepsmiling]

Ah Hats! I knew your avatar was familiar!

[OhioFiler]

Try negotiating a settlement with the debt collector first. Probably for the cost of an attorney and filing fees you could get them to go away if the debt is only $12,000.

[tdgirl3258]

Try negotiating a settlement with the debt collector first. Probably for the cost of an attorney and filing fees you could get them to go away if the debt is only $12,000.

Based on how much we could pay a month and with the interest rate of 18%, it would take 10 years to pay off. When they garnished my wages in 2008 the principal amount never went down, we were only paying interest. Negotiating isn't possible.

[keepsmiling]

Based on how much we could pay a month and with the interest rate of 18%, it would take 10 years to pay off. When they garnished my wages in 2008 the principal amount never went down, we were only paying interest. Negotiating isn't possible.

That doesn't sound like an attempt at negotiating.
Did you check that they didn't take too much money? could be they owe you, worth a shot and also worth a shot at a small lump sum offer.

[tdgirl3258]

That doesn't sound like an attempt at negotiating.
Did you check that they didn't take too much money? could be they owe you, worth a shot and also worth a shot at a small lump sum offer.

Yes, they took out too much money back then, the woman at my job had received an old paper from the Sheriff's office who delivered the garnishment paperwork, to tell her how much to take out. We didn't realize she was taking too much out until much later, it had been based off of the old minimum wage. We were living on $200 or less a week back then, hence the reason we had to move in with a relative because we couldn't afford rent much less rent on top of groceries, gas, etc. That was in 2008, we figured it's been too long since then to make a fuss about it.

We did first try to negotiate, right after the car was sold we tried to pay a set amount but it was at a time when my old job was having to reduce hours and pay and it was either pay the debt or pay rent, so we had to chose rent. Afterward they didn't want to deal with us and filed for the garnishment and was no longer willing to work with us, which is understandable.

[LadyInTheRed]

Thanks. I became worried when I took the online credit counseling requirement (which is a joke, every information I read about is information I had already read about for free online elsewhere.) $25 for a sheet of paper is stupid. Anyway, it said we should only be spending $191 a month for groceries based on my income, for two people. We've lived on a noodle diet before, we are getting too old to go back to that. So that had us worried about reporting we spend almost double that per month for food alone.

I'm sure once we meet with the lawyer, our worries may ease. I appreciate the support though.

Sounds like the counseling course was creating a budget based on your income, not the standards used on the means test.

A family of two is allowed $537 per month for food. Here are the national standards for living expenses: http://www.justice.gov/ust/eo/bapcpa..._standards.htm

Information on national standards for health care and local standards for other expenses can be found at: http://www.justice.gov/ust/eo/bapcpa...anstesting.htm

With your income so far below median, you shouldn't have any problem with a Chap 7. Just make sure you have a competent attorney.

I had forgotten, my wife had posted that a few months back.

It really would be better if you each have your own account. It will avoid confusion and possible warnings from moderators not to post the same questions twice if you both unknowingly ask the same thing.

[momofthree]

Here is a link to national standards: http://www.justice.gov/ust/eo/bapcpa..._standards.htm

Family of 2 is allowed $985/mo for food/clothing/misc. Medical is $60/mo/person. Operating expense for 1 vehicle is around $200/car depending on region of the country, but that's a really flexible area because often gas itself costs more than that. Plus insurance, tags, etc. and most judges don't bat an eye if you go over that amount. Sooooo...

985+120+200=1305 just based on national standards. I'm sure you have other expenses that you could easily add in too.

You should easily be a ch.7.