HELP - I might not qualify.

[Jimedwards]

Hi, I'm new here and want to thank everybody for their help in advance.

I get paid in the low-mid $100K and have over $50,000 in CC debt thanks to a long divorce.

I spoke to a BK lawyer who said point blank that I likely won't qualify for Chapter 7 even though i have no money left after each paycheck. He pushed hard for Chapter 13.

My biggest monthly expenses include $1,000 in student loans, $1,450 in child support, $1,200 rent/utilities, $400 car, $1,000 that i try to apply to my CCs, and $900 in travel expenses to see my child once a month (ex decided to hightail it to another state). After taxes, I take home over $6,000 each month so as you can see, the expenses listed above drain my whole paycheck and don't leave money for anything else.

What sucks is that many of these expenses (travel expenses, student loans, CC payments) don't get calculated on the means test.

I'm in the process of consulting with several lawyers but would appreciate any insight as to whether I can qualify for Chapter 7 under these circumstances.

Thanks

[TXskyblue]

Of course credit card payments don't get calculated in - those would be discharged in a 7.

I don't think student loans are calculated in. Not 100% sure since I don't have any, but that's what I think I've read here. Hopefully others will chime in.

I would think that travel expenses to see to see your child, since they are regular, would be able to be counted but that's definitely one for the lawyers.

Here's the the bottom line: Lawyers are like everyone else. They make more from you if you file a 13 than if you file a 7. They are incentivized to see people as chapter 13s. If you go to multiple lawyers and EVERYONE tells you 13, then it probably really is a 13. The first lawyer I went to said I would be a 13, hands down, no discussion. Next lawyer I saw said that my expenses were high enough and I probably could make a 7.

Now, your income is really high for a 7. If you're making 140k, you're way way over median. There's a means test that is recommended here a lot (http://www.legalconsumer.com/bankruptcy/means-test/). Try it and see what it tells you. It's very close to what my real means test shows.

I suspect you will not be able to make a 7 today. Are you working overtime to hit that 140k or is that base salary? The reason I'm asking is that you could do some strategic planning and stop working any overtime/side jobs at all for 6 months. The look back is 6 months. If you were able to reduce your income for the means test, you might be able to meet the chapter 7. Do some calculations and see what the lowest you could get your income to is. That would be golden information to present your next attorney.

After knowing what the lowest you can get your 6-month salary to, the key is to know your allowable expenses. My mortgage is really high so that helped me a lot, being an above-median filer. Also, I purchased a new car. The $500 payments helped as well. You need a lawyer who is willing to work with you and not just see your income as a good paycheck for him in a 13.

My lawyer told me people well over 100k income qualify for a 7 sometimes, but it's all about expenses. Expect extra scrutiny from the UST and the TT.

See more lawyers.

[despritfreya]

Welcome to the forum.

My biggest monthly expenses include $1,000 in student loans (student loans are not included for means testing and ONLY included in a few jurisdictions on Schedule J in Chapter 13 cases), $1,450 in child support, $1,200 rent/utilities, $400 car (car, unless it is a lease, is paid through the Plan in most jurisdictions for Chapter 13 purposes therefore not included on Schedule J), $1,000 that I try to apply to my Ccs (credit cards are not included period since you are trying to prove you cannot afford to pay any), and $900 in travel expenses to see my child once a month (maybe included under “special circumstances” for means testing and should be included on Schedule J for Chapter 13 purposes as a necessary expense). After taxes, [B]I take home over $6,000 each month [/B](How much over? Are we talking pennies or do you take home $6,999.99 per month?) so as you can see, the expenses listed above drain my whole paycheck and don't leave money for anything else.

Here is the reality. Your expenses listed above total $5,950.00. Out of that, $2,900,00 IS NOT included for means testing (maybe $900.00 for special circumstances but assume it is not). Assuming your take home pay is $6,000.00 This means your disposable income is$2,950.00 per month. Unless you are a non-consumer case it is highly unlikely that you will qualify for a 7 therefore, you are looking at a Chapter 13. In the 13 your vehicle will most likely be part of the Plan and you will not be able to discriminate in favor of the student loans.

You do need to meet with more attorneys but please don’t think you will find one who is going to “fit” you into a Chapter 7. If you do, I would be highly suspect over that attny's qualifications.

Des.

[Jimedwards]

Are you working overtime to hit that 140k or is that base salary? The reason I'm asking is that you could do some strategic planning and stop working any overtime/side jobs at all for 6 months. .

Thanks for the response. It is straight salary. I'm so embarrassed to be making so much and still be broke at the end of every month.

[Jimedwards]

You do need to meet with more attorneys but please don’t think you will find one who is going to “fit” you into a Chapter 7. If you do, I would be highly suspect over that attny's qualifications.

Thanks. Definitely not looking for that. I just want to understand the realities of my situation.

Alarm bells went off when I spoke to the lawyer because he heard my salary and said I need Chapter 13. He didn't ask about ANY of my expenses, which thanks to this forum I knew were equally important.

[TXskyblue]

Thanks for the response. It is straight salary. I'm so embarrassed to be making so much and still be broke at the end of every month.

Unless you have more allowable expenses, it looks like you're going to be in a 13. You won't meet the means test.

I totally get the "I make too much money to be this broke" comment. I don't make as much as you, but I've made 100K in some years. I live in a low cost-of-living area, so that's a tidy sum. And yet I still was able to mismanage my finances to end up with tens of thousands in CC debt and little to show for it.

I cannot change what I've done in the past, but I can change what I do in the future. You can too.

[TXskyblue]

...

[tobee43]

as des suggests, make certain you go to a few atty interviews. we had the same problem because our income was "high" most attys we spoke to tried to push a 13. only a few we spoke to understood our income was based on unemployment insurance, ss, and a pension...all exempt incomes when we filed. we were over the 100k mark at the time. good thing, as of course, once the ui stopped we lost over 30k (closer to 47k),of income and would have had to go back into court and covert....so be careful and make certain you get someone that really understands your situation.

[justbroke]

Thanks for the response. It is straight salary. I'm so embarrassed to be making so much and still be broke at the end of every month.

I'm highly compensated and look at my username! Yes, I was broke too and was making more than you are/were. Remember, the cost of living is always the same; all you've got!

[keepsmiling]

Look at it this way.... you make a good salary. This is a GOOD thing. Many of us who easily qualify for a 7 would happily trade places with you! I volunteer lol

So.... keep your perspective. At 1000 a month, it will probably take umpteen years to pay your debt. In a 13 , it's over and done in 5 years.

Meanwhile we suggest EVERYONE consult with more than one attorney. Even though you have little chance of having anyone fit you into a 7, you should gain some valuable insight and advice.