Failed the means test for chapter 7?

[philrozzi]

Great advice from everyone thanks. Ive been reading this forum for some months now because everyone is so helpful and no-one attacks or belittles anyone.

That's good to know that a chapter 13 isn't all that bad, some other threads online people were saying that their chapter 13 plan basically used up their whole disposable income and they didn't have much money left over for even food. As far as child care goes I have a few options, first what we have planned right now is our parents will be watching the kid. Also if need be my work has a daycare which runs roughly $150 to $170 a week depending if your kid is there 4 or 5 days. But problem is that it's only open 7-5 on first shift and I work second shift so I would have to switch shifts.

I will have to see more attorneys in the coming months I don't think I will be going back to the office I first went to. It was nice because they had a flat rate bk for $500 but the lawyer sounded like a cocky ass when I heard him talking to someone in his office about a case.

[keepsmiling]

Even if your parents watch the baby, it may be wise to pay them. It could wind up being them or the creditors! It could keep you out of a 13. This is why good planning is a must. Consider all possibilities and read everything you can.

I wouldn't trust a 500 dollar lawyer. That is way below market value and he can't possibly do a good job at that price unless it is subsidized by your work or something else. A 7 will probably run somewhere ballpark between 1200 and 2200 (here on the East Coast, more) and a 13 will be around twice that price.

[LadyInTheRed]

That's good to know that a chapter 13 isn't all that bad, some other threads online people were saying that their chapter 13 plan basically used up their whole disposable income and they didn't have much money left over for even food..

Don't get me wrong. Most Chap 13s are not easy. It is true that a Chap 13 uses all of your disposable income, after deductions for necessary expenses like food and other living expenses. You do have to budget and may have to cut your spending. It is important to find a good attorney who will draft a livable plan. People who don't have enough to buy food in a Chap 13 are either trying to keep assets they can't afford and shouldn't be in a Chap 13 in the first place, are unwilling to live within a budget or had a poorly drafted plan.

I will have to see more attorneys in the coming months I don't think I will be going back to the office I first went to. It was nice because they had a flat rate bk for $500 but the lawyer sounded like a cocky ass when I heard him talking to someone in his office about a case.

Definitely sounds like a mill who is only good for a very simple Chap 7, if that. That is an insanely low rate. Not a good sign. Sometimes you really do get what you pay for. Expect to pay at least twice that for a Chap 7 and more for a Chap 13. In a Chap 13, most of the fee will probably be paid in the plan.

[May2014]

Phil, we had to convert from a 7 to a 13. The 13 hasn't been so awful for us. We have been able to put a little money away each month AND add a teen driver (that wasn't figured into our numbers). Yes, we don't spend money like we used to and it's scary to not have an emergency credit card...but in 4 years and 5 months, we will be debt free. You may end up with a 13 that only pays your secured creditors. We were going to keep 2 cars and 2 student loans regardless of our chapter, and we are only paying $50 more a month in a 13 than we would have in a 7. Definitely talk to some other experts, but don't panic either way.

[philrozzi]

How do student loans work after a chapter 7 or 13? Say if someone goes through a chapter 7 and still can't pay student loans, even though the student loan won't be wiped out will they still be protected from further collection? Or would someone have to file a chapter 7 every few years to avoid having them draining a savings account or garnishing wages?

[keepsmiling]

That is a good q, and someone more knowledgeable will hopefully be along eventually with more info. However, I can tell you this. You CAN"T file every few years, so that's not a strategy. A very very few have managed to discharge school loans, but that is usually only under extreme circumstances. Others (I am thinking of Treehugger, who used to be around all the time and now rarely is, although I would love it if he/she would pop in because of his/her interesting viewpoint and strategy) have different experiences. Tree had wages garnished at 15% for student loan, never actually declared bk. Turned out to be the most efficient solution as it kept the other creditors at bay and he was able use the SOL as a defense.

There is also something called Income Based Repayment, which is just as it sounds. Some have very low or even Zero payments.

[philrozzi]

I did aa little research today and I found out that the creditors can indeed start collecting on student loans after bankruptcy. So far the only options would be to settle the debt or wait for the statute of limitations to expire which in Ohio is unfortunately 8 years. In that case I would have to go three years without them suing me then get a chapter 13 for five years and run out the statute that way. So far there are no good options for private student loans.

[May2014]

Most student loans can't be discharged in either Chapter. In a 7, you would pay like always. Student loans get paid during a 13 as part of your plan. Anything that doesn't get paid within that five years should continue with normal payments after discharge. I don't know how the statute of limitations comes into play on a student loan, but that sounds kind of risky. How much in loans are you talking?

Here is some great info, if you haven't seen it already.

http://www.forgetstudentloandebt.com/student-loan-relief-programs/private-student-loan-relief/private-student-loans-bankruptcy-discharge/

[philrozzi]

Approximately 30,000 in student loans. I'm having a hard time finding many threads about private student loan help

[keepsmiling]

Most student loans can't be discharged in either Chapter. In a 7, you would pay like always. Student loans get paid during a 13 as part of your plan. Anything that doesn't get paid within that five years should continue with normal payments after discharge. I don't know how the statute of limitations comes into play on a student loan, but that sounds kind of risky. How much in loans are you talking?

Here is some great info, if you haven't seen it already.
http://www.forgetstudentloandebt.com...tcy-discharge/

GREAT article! Thanks for posting!
the thing about having your wages garnished is that there is a limit to how much they can take at one time. And in Tree's case, it kept the OTHER creditors at bay long enough to get to the SOL.

[LadyInTheRed]

I did aa little research today and I found out that the creditors can indeed start collecting on student loans after bankruptcy. So far the only options would be to settle the debt or wait for the statute of limitations to expire which in Ohio is unfortunately 8 years. In that case I would have to go three years without them suing me then get a chapter 13 for five years and run out the statute that way. So far there are no good options for private student loans.

I am pretty sure the statute of limitations is tolled during a BK, which means that if you wait 3 years, then file BK for 5 years, the creditor will still have 5 years after the BK is discharged to sue. Actually, if they are paid during the BK, the
SOL might even start over again.

[flaguy]

. Those of you who are getting chapter 7's how are you passing this stupid test?

ALL non consumer debts, so it doesn't apply to me

[philrozzi]

Not All of mine was consumer debt either. I had a couple of failed business ventures on credit cards as well, I tried importing and selling various goods from China, buying and reselling on eBay, etc... But I'd have to go through years of statements to figure out what was consumer and what wasn't.

[avengers]

I went to my lawyer last week and he informed me that I failed my means test which was based on mine and my wife's income. Those of you who are getting chapter 7's how are you passing this stupid test?

By being really poor. :-(

I was unemployed for months (for so long that my unemployment ran out). And my wife didn't have full time employment either, so her salary is basically $1k/month.

[catleg]

You should research whether her disability income during maternity leave is exempt, either as Social Security funds or by the action of a state exemption . You might be stuck taking your state exemptions for property instead of federal, however state law exempting pensions and disability proceeds can be a very powerful lever. Few if any lawyers would even know to check this either. It might get you under the cutoff for ch7.

Normally the hardest part is convincing your own lawyer.