Ch 7 to be dismissed shortly, getting prepared for collections

[dontburnthep]

Then to follow sunshinepa's comment...do you think you could at least get a free consult or two from other atty's? just to make ABSOLUTELY sure that there's nothing that can be done...

We've spoken with 2 additional lawyers- neither sees a way to salvage THIS filing, although both were encouraging about a new 13 filed in the next year or two. Neither of them mentioned this additional $200 per car either. I wonder if our district maybe doesn't allow it? (Middle district of NC.)

[IamOld]

Good Lord - I was just grasping at straws...

But perhaps aggressive debt negotiations can help...sometimes as others would point out you need to wait just long enough...

[dontburnthep]

Good Lord - I was just grasping at straws...

I appreciate any straw grasping anyone can do! After making such a poor decision on lawyer #1, I wanted to be sure there was no way to salvage the 7 and that's why I spoke with the 2 other lawyers. One of them spoke extensively with me back and forth for several weeks, going so far as to dig into Pacer to see if there was any straw she could grasp as well.

After thinking about it, I bet our district didn't allow the additional $200 because they did allow the ownership expense even on a car paid in full. Now that Ransom has removed the ownership expense, I suspect our district will eventually allow the additional $200 per car, once a few cases make their way through the courts. Ours could have been a good test case but we simply don't have the $3750 required to see it through.

[IamOld]

I wish you all the best my friend, all the best!!!!

[Pandora]

T



We might qualify for a 7 if we spent the next 6 months catching up on all medical/dental, got adequate childcare, and did all the maintenance the cars needed- however, we lost 1K off our means test with the Ransom decision, so we'd have to spend 1K a month spread out over the 6 months, for a total of 6K, to qualify for the 7 and even if we caught up on everything, I don't think it would be enough to qualify. Nor do we have 1K a month to put toward those expenses.

Okay maybe my mind isnt working right or something - but.... how can you NOT qualify for a Ch. 7 - even if you wait the required timeframe to refile since you have "no prejudice" on dismissal and obtain everything you need to now (child care, cars, medical benefits, etc) ?? Then re-file Ch. 7 after your 6 month lookback shows everything? It sounds like on paper you're showing $1K however in reality you do not have that money available to you every month.

Something doesnt sound right; not meaning you personally..but your lawyer(s) you've hired / spoken with. Why on earth would you convert to a 13 if you cannot even afford the necessities currently?


Des... HHM... JB...anyone else.... am I the only one seeing it this way or...??


ETA: hang on a sec.... is this another reason why you wont qualify? We have approximately 30% of his debt saved to go toward settlement. So you have $9K sitting there, waiting to try to settle, but havent paid for necessities and instead used the money for this purpose? Now you probably cant re-file Ch. 7 unless you spend that $ down and you cannot pay any creditors as that will be viewed as preference. You can spend it down other ways however (new car downpayment, medical, etc). You stated by saving and converting to a 13, it would be a valid option, however... can you exempt all that money if need be?

I think you need to talk to a few more lawyers - outside of the area you are

Also - maybe you should cut back on your work hours soas to lower your lookback $. ??

[bcohen]

The Ransom decision basically makes it the law -- across the land -- that you can't claim the "national standard" (ownership allowance) of $469/month as a car expense, if you don't have a loan on the car (or a lease)! Some courts were allowing the debtor to deduct the so-called "ownership allowance" even though the debtor had no loan (or lease) on the car!

The Supreme Court, in Ransom vs. FIA Card Services (Bank of America) made it the undisputed law (in an 8-1 vote) that you cannot take the allowance if you don't have a loan or lease!

Wow, so the Supreme Court is saying that debtors who don't owe for a loan/lease don't have car expenses for insurance, upkeep, repairs, fuel costs, etc?! What a load of %*#@!

[Pandora]

Wow, so the Supreme Court is saying that debtors who don't owe for a loan/lease don't have car expenses for insurance, upkeep, repairs, fuel costs, etc?! What a load of %*#@!

there is ownership allowance (car payment) and then there is operating costs (what you mention). You do get operating costs

[dontburnthep]

So you have $9K sitting there, waiting to try to settle, but havent paid for necessities and instead used the money for this purpose? Now you probably cant re-file Ch. 7 unless you spend that $ down and you cannot pay any creditors as that will be viewed as preference. You can spend it down other ways however (new car downpayment, medical, etc). You stated by saving and converting to a 13, it would be a valid option, however... can you exempt all that money if need be?

Yes, that's accurate. Originally, after our 341, we started saving so we'd have a cushion going into our 13 conversion. We've saved instead of paying for necessities- and a large chunk of that savings is also our tax refund. We can exempt it all as we have nothing else but the aging vehicles. Shortly after the 341, after speaking with lawyers #2 & #3, we decided that a conversion was a bad plan, but that a new filing in a year or two after dismissal was a very real option. So at that point we continued saving instead of paying for necessities, because we knew it would be a year or two if and until we re-filed. Now that we have that savings, and we have to wait to re-file, we've got time where the creditors very well may sue us, and are trying to develop a plan for dealing with them, knowing that re-filing a 13 is also an option in the future. Since we filed in 12/10, it's been 8 months of the creditors getting no payment, so we aren't sure we'll have very long before they start suing.

But even before we started saving, we would have a hard time qualifying for a 7- on paper or in reality, because we need to make up at least 1K of expenses per month and with childcare, car maintenance and medical/dental, we wouldn't quite get there. The additional $200 per 10+/75K+ models would push us over with plenty to spare, however. We COULD afford a 13 payment of several hundred dollars and still pay for necessities although it would be tight as a chapter 13 plan is supposed to be, but we cannot afford a 13 payment of somewhere around $1400 which is where we were at with our original filing numbers.

Also - maybe you should cut back on your work hours soas to lower your lookback $. ??

This is something I'm not willing to do. If I cut back my hours, I would lose my job, and while losing my job would guarantee us a successful chapter 7, I don't want to lose my job. I love what I do, and I don't want to lose it. But you're right that it would solve the chapter 7 vs. 13 problem.

[dontburnthep]

Wow, so the Supreme Court is saying that debtors who don't owe for a loan/lease don't have car expenses for insurance, upkeep, repairs, fuel costs, etc?! What a load of %*#@!

Not exactly. As Pandora said, there are two allowances. The ownership expense and the operating cost. If you have a lease or loan, you get the ownership expense AND the operating cost, if own your car outright, you get just the operating cost. In theory, it's reasonable, but in practice, many cars that are owned outright are older models and require much more upkeep and maintenance costs then a new car with a payment. And with the rising cost of gas, the operating cost alone isn't enough. I work from home and my husband works 5 miles from home, but we go through nearly the monthly operating costs every single month even with no maintenance!

I think the ownership allowance of I believe it was $496 is outrageously high, but I think changing to only operating cost for older cars is ridiculously low. If the $200 per car for 10+/75K+ models is accepted in my district in the future, I think that's a nice compromise.

[IamOld]

I hate to disagree with you but in many metro areas $496 a month AVERAGE is not outrageously high - gas, maintenance, AND wear and tear...

Not exactly. As Pandora said, there are two allowances. The ownership expense and the operating cost. If you have a lease or loan, you get the ownership expense AND the operating cost, if own your car outright, you get just the operating cost. In theory, it's reasonable, but in practice, many cars that are owned outright are older models and require much more upkeep and maintenance costs then a new car with a payment. And with the rising cost of gas, the operating cost alone isn't enough. I work from home and my husband works 5 miles from home, but we go through nearly the monthly operating costs every single month even with no maintenance!

I think the ownership allowance of I believe it was $496 is outrageously high, but I think changing to only operating cost for older cars is ridiculously low. If the $200 per car for 10+/75K+ models is accepted in my district in the future, I think that's a nice compromise.

[dontburnthep]

I hate to disagree with you but in many metro areas $496 a month AVERAGE is not outrageously high - gas, maintenance, AND wear and tear...

I'm not in a metro area and I work from home so don't drive much. I should have said, for us, $496 + $496 + $478 is outrageously high. That's $1470 a month in vehicle exemptions and that's certainly more then we spend or need to spend. But dropping from that to to just $478 isn't enough, either.

[IamOld]

I'm not in a metro area and I work from home so don't drive much. I should have said, for us, $496 + $496 + $478 is outrageously high. That's $1470 a month in vehicle exemptions and that's certainly more then we spend or need to spend. But dropping from that to to just $478 isn't enough, either.

Right and there is the issue with "national" figures or even medians for states...for example, where I live in my portion of my state the median income for the state as a whole is considered about $30K BELOW our regional median...so it is wholly unfair for the bulk of my state's population which lives in my area.

[dontburnthep]

Right and there is the issue with "national" figures or even medians for states...for example, where I live in my portion of my state the median income for the state as a whole is considered about $30K BELOW our regional median...so it is wholly unfair for the bulk of my state's population which lives in my area.

Yep, I agree that the national figures as well as the median figures are not accurate or fair. Neither the high of $1470 or the low of $478 is applicable to us at all! And we're near the top of our housing allowance, in a very modest 3 bedroom ranch home. My kid's share a bedroom and I have the small 3rd bedroom for my office. The food allowance doesn't take into account the massive rises in prices over the past few years. Blah blah, I know I'm preaching to the choir here

[treehugger1]

In addition, the student loans can be a real wild card if you have a high interest rate. Five years on hold will certainly jack up the total amount owed after five years. In general you can't even pay the SLs inside a 13 plan unless you are at 100% payback. I think you should speak with a solid CPA. I eventually did that and we worked out a five-year comparison plan between a 100% BK 13 and just walking away accepting a 25% wage garnishment. Over five years, walking away was the best option. The model has turned out very well. I continue to build retirement, my student loans are on a permanent wage garnishment at 15%, and other judgment creditors can have the remaining 10%. It has been a real deal for me. I'm still bankrupt no matter how you look at it. What I lost was my credit rating. What I gained was student loans coming down, retirement savings increasing, and approximately 1/4 of my unsecured debt is beyond the SOL. Again, see if you can find a CPA who will listen very carefully to you. At this point your credit is smashed to pulp. Try to come up with some reasonable goals before a meeting. Best to you.

[dontburnthep]

In addition, the student loans can be a real wild card if you have a high interest rate. Five years on hold will certainly jack up the total amount owed after five years. In general you can't even pay the SLs inside a 13 plan unless you are at 100% payback. I think you should speak with a solid CPA. I eventually did that and we worked out a five-year comparison plan between a 100% BK 13 and just walking away accepting a 25% wage garnishment. Over five years, walking away was the best option. The model has turned out very well. I continue to build retirement, my student loans are on a permanent wage garnishment at 15%, and other judgment creditors can have the remaining 10%. It has been a real deal for me. I'm still bankrupt no matter how you look at it. What I lost was my credit rating. What I gained was student loans coming down, retirement savings increasing, and approximately 1/4 of my unsecured debt is beyond the SOL. Again, see if you can find a CPA who will listen very carefully to you. At this point your credit is smashed to pulp. Try to come up with some reasonable goals before a meeting. Best to you.

This is exactly the conclusion we've come to in regard to my debt. My husband's, we are still waffling on garnishment vs. settling vs. refiling a 13 with better numbers. A CPA is a great idea. Thank you.