Question Some very basic questions that I haven't been able to find answers to

[anon45]

So I'm bascially trying to find out information at this point. I'd prefer not to have to go this route, it will more determine what happens with my job situation as I've been out of work and this corona virus thing has killed any prospect of getting a job. With that being said, here are the questions

This would be in Florida

1. What happens if my spouse doesn't file with me. I understand you list the assets or whatever, but is she free from any restrictions if it did end up in chapter 13? What about assets that are owned by both parties or things that we have that are owned by both parties, can they sell those?

2. I read about the means test and being able to add expenses such as medical expenses to help pass the means test to file chapter 7 instead of chapter 13. One question is, say both kids need braces, isnt it better to put on credit card and being able to erase in bankruptcy versus getting a payment plan? If its put on a credit card, will that mess up the means test? The kids need them sooner rather than later and we have insurance now that will cover a bit of it. we lose that insurance February of next year.

3. Related to question 2, For the means test and if we fail the means test and I had to do chapter 13, there are a lot of allowed expenses which for me being very frugal are bascially more than i spend now. Would I be able to list and use those or do I need to start spending that money ahead of time? I don't want to be giving extra stuff away when we could actually have a budget for entertainment versus just sitting in the house all the time.

4. Does the trustee or someone come to your house and look at your belongings or how does that work?

[justbroke]

Welcome to BKForum! I'm from Florida so let me take a swing at this. Please note that even between the districts in Florida (Northern, Middle, Southern) there are some differences. Even between "divisions" within those districts, there could be differences. I'll try to be generic.

I'm answering these as though you are planning to file a Chapter 7.

1. What happens if my spouse doesn't file with me. I understand you list the assets or whatever, but is she free from any restrictions if it did end up in chapter 13? What about assets that are owned by both parties or things that we have that are owned by both parties, can they sell those?

If you have shared creditors then this could be problematic. As for a Chapter 13, "free from restrictions" means all sorts of things. Her income will be used on your Means Test and Schedule I/J to calculate your disposable monthly income (DMI). To the extent that her income is used to pay her "sole" creditors or other "sole" expenses, that income can typically be removed from the DMI upon a showing of proof.

2. I read about the means test and being able to add expenses such as medical expenses to help pass the means test to file chapter 7 instead of chapter 13. One question is, say both kids need braces, isnt it better to put on credit card and being able to erase in bankruptcy versus getting a payment plan? If its put on a credit card, will that mess up the means test? The kids need them sooner rather than later and we have insurance now that will cover a bit of it. we lose that insurance February of next year.

As for expenses, you want to make sure that you include all your expenses. We often forget where our money is spent; we only know that it's all gone every month. Medical expense can be an additional allowed expense so long as it is necessary. I do not know the position on orthodontics within the Florida districts.

I can not condone putting charges on a credit card on the eve of filing bankruptcy, or with the explicit intent to have it discharged in a bankruptcy. Now, if it's a necessity and you use a card, such as CareCredit, to finance the braces and later find yourself in a financial jam, then I would say that's okay. With a caveat, of course. You should have been making regular payments for some period of time (don't ask me how long). Otherwise it looks like, well, you ran up your credit knowing that you were going to file... and that would be cause for a creditor to levy a non-dischargeability complaint.

3. Related to question 2, For the means test and if we fail the means test and I had to do chapter 13, there are a lot of allowed expenses which for me being very frugal are bascially more than i spend now. Would I be able to list and use those or do I need to start spending that money ahead of time? I don't want to be giving extra stuff away when we could actually have a budget for entertainment versus just sitting in the house all the time.

You are usually fine with using the IRS Collection Financial Standards (on which the UST values are based). Most people cut back when they can't afford their bills, but your Chapter 13 expenses should be projected base on what you should be spending. I have a post here which is my rage against Trustees and debtor-attorneys that tell Chapter 13 debtors to do belt-tightening, more belt-tightening or to just suck it up.

I am going to assume you plan to use an attorney. The attorney should be well versed in Chapter 13s and get you a good plan. I would recommend that, when you're interviewing attorneys during your free consult, you ask them about Chapter 13s and budgets and expenses. Make sure you're comfortable with what they explain.

4. Does the trustee or someone come to your house and look at your belongings or how does that work?

For a Chapter 7 in Florida? It depends. It depends if whether you claim the unused homestead exemption? It can also depend on the Trustee not trusting your valuations (a 3,000 square foot home with only $1,000 in furniture?)? It can also be Trustee specific!

[anon45]

Thank you this was pretty helpful.

We don't have shared creditors besides the house which I understand we can exempt with homestead. The problem is, my wife does what she wants, she spends what she wants and her answer when I tell her she is spending more than we make is to go make more money. She also takes money for herself to a separate account while we don't have enough to cover the bills. Does this money get subtracted for the means test? Is it enough to show she gets it direct deposited to her own account and not our joint account?

So for the expenses, I was more trying to ask if I put it on a credit card, will that mess up the means test? Does it have to be an expense not on a credit card to help for the means test? And then if its not on the credit card, it has to go through the bankdruptcy right? so then the doctor stops working on my kids.

So I don't have to be using the expenses that I claim now in order to claim them for chapter 13 in the future? So even if we aren't using entertainment or dry cleaning, we can include those. I should be using them but bills take away from that currently.

I would plan on using an attorney, at this point I'm just trying to get the info so I'm prepared if I did need to do something like this. You only get one chance at a free consultation so I don't want to do that until and if it becomes a definate reality.

As for the last point. Our home isn't 3000sqft its about 2400 sq ft under air. My understanding from reading is everyone just claims the 1000 exemption. I don't have any fancy furniture, I assume the kids and us get to keep the bed etc?

Is it a common thing for the trustee to come to the house in florida or send someone? That just freaks me out a bit. Lets say they did find something they could sell and I didn't want to sell it, is there anyway to save it? Finally how does that work when only one spouse files? Lets say there was an extra ornate couch or something that we had that could be sold. If the other spouse doesn't file, can't she just say its hers or half hers? Not trying to do anything illegal, just trying to figure out how it all works.

Welcome to BKForum! I'm from Florida so let me take a swing at this. Please note that even between the districts in Florida (Northern, Middle, Southern) there are some differences. Even between "divisions" within those districts, there could be differences. I'll try to be generic.

I'm answering these as though you are planning to file a Chapter 7.

If you have shared creditors then this could be problematic. As for a Chapter 13, "free from restrictions" means all sorts of things. Her income will be used on your Means Test and Schedule I/J to calculate your disposable monthly income (DMI). To the extent that her income is used to pay her "sole" creditors or other "sole" expenses, that income can typically be removed from the DMI upon a showing of proof.

As for expenses, you want to make sure that you include all your expenses. We often forget where our money is spent; we only know that it's all gone every month. Medical expense can be an additional allowed expense so long as it is necessary. I do not know the position on orthodontics within the Florida districts.

I can not condone putting charges on a credit card on the eve of filing bankruptcy, or with the explicit intent to have it discharged in a bankruptcy. Now, if it's a necessity and you use a card, such as CareCredit, to finance the braces and later find yourself in a financial jam, then I would say that's okay. With a caveat, of course. You should have been making regular payments for some period of time (don't ask me how long). Otherwise it looks like, well, you ran up your credit knowing that you were going to file... and that would be cause for a creditor to levy a non-dischargeability complaint.

You are usually fine with using the IRS Collection Financial Standards (on which the UST values are based). Most people cut back when they can't afford their bills, but your Chapter 13 expenses should be projected base on what you should be spending. I have a post here which is my rage against Trustees and debtor-attorneys that tell Chapter 13 debtors to do belt-tightening, more belt-tightening or to just suck it up.

I am going to assume you plan to use an attorney. The attorney should be well versed in Chapter 13s and get you a good plan. I would recommend that, when you're interviewing attorneys during your free consult, you ask them about Chapter 13s and budgets and expenses. Make sure you're comfortable with what they explain.

For a Chapter 7 in Florida? It depends. It depends if whether you claim the unused homestead exemption? It can also depend on the Trustee not trusting your valuations (a 3,000 square foot home with only $1,000 in furniture?)? It can also be Trustee specific!

[justbroke]

We don't have shared creditors besides the house which I understand we can exempt with homestead. The problem is, my wife does what she wants, she spends what she wants and her answer when I tell her she is spending more than we make is to go make more money. She also takes money for herself to a separate account while we don't have enough to cover the bills. Does this money get subtracted for the means test? Is it enough to show she gets it direct deposited to her own account and not our joint account?

To the extent that you can demonstrate the portion of her income that goes to her sole creditors, that should be fine. This is called the marital adjustment. It will be scrutinzed.

So for the expenses, I was more trying to ask if I put it on a credit card, will that mess up the means test? Does it have to be an expense not on a credit card to help for the means test? And then if its not on the credit card, it has to go through the bankdruptcy right? so then the doctor stops working on my kids.

No. Unsecured debt does not mess up the means test at all, unless you're trying to file a Chapter 13 and your unsecured debt exceeds something like $350K or so. Otherwise, unsecured debt is not an issue since the debt would be discharged. Since you can't use it as an expense on the means test, do not assume that the monthly payments are allowed expenses in bankruptcy.

So I don't have to be using the expenses that I claim now in order to claim them for chapter 13 in the future? So even if we aren't using entertainment or dry cleaning, we can include those. I should be using them but bills take away from that currently.

You should include what you would normally do while staying within the guidelines.

I would plan on using an attorney, at this point I'm just trying to get the info so I'm prepared if I did need to do something like this. You only get one chance at a free consultation so I don't want to do that until and if it becomes a definate reality.

Very good.

As for the last point. Our home isn't 3000sqft its about 2400 sq ft under air. My understanding from reading is everyone just claims the 1000 exemption. I don't have any fancy furniture, I assume the kids and us get to keep the bed etc?

"Everyone just claims the 1000 exemption" really underestimates how much impact that has. If you are keeping your homestead exemption, the Trustee still expects that you have more than $1,000 in "all" furnishings. Unless your home is underwater (has no equity), you will not be able to claim the "unused" homestead exemption (of $4,000). Because you are filing single, you don't get to double the exemptions. Additionally, what's mine is mine and what's here is hers can become problematic when valuing property.

Is it a common thing for the trustee to come to the house in florida or send someone? That just freaks me out a bit. Lets say they did find something they could sell and I didn't want to sell it, is there anyway to save it? Finally how does that work when only one spouse files? Lets say there was an extra ornate couch or something that we had that could be sold. If the other spouse doesn't file, can't she just say its hers or half hers? Not trying to do anything illegal, just trying to figure out how it all works.

As I wrote, if you claim the homestead exemption (are keeping your home), expect that the Trustee will not like to see that "all" your property is only worth $1,000. Even in a 2,000 square foot home, you have more than $1,000 in clothing, pots and pans, dishes, televisions, media (dvds/cds/books), furniture (beds, mattresses, dressers, tables, chairs, etc), computers (iPad, laptops, desktops), cellular phones, clothing, shoes, and other items.

If you write that you only have $1,000 worth of property, and you are declaring the homestead exemption, it is highly likely that the Trustee will send and auditor to your home to value your property.

[anon45]

so thats the issue with her stuff, she obviously has certain things like a car, student loans, credit card debt that is her own, but she also just takes 200 every two weeks to a separate bank account. Can I exclude that? I could die on the curb and she wouldn't give me that money. I've pled with her as we've put things on credit cards while she is buying nonsense with her private money.

As for the unsecured debt messing up the means test, i meant as far as triggering the ability to do chapter 7 or not. my understanding is that if the expenses go on a credit card, they wouldn't be expenses that couldn't be used towards a creditor in chapter 13.

As for the you should include what you normally do while staying in the guidelines. Are you saying that I can't add in normally allowable expenses even if we don't use those now? So if I don't use entertainment now or drycleaning now because I can't afford it, you are saying I can't add it to expenses?

So how do people handle the 1000 dollar exemption then? Obviously we have ipads for the kids and furniture, but nothing that is worth trying to sell and the kids actually need them for school etc. If you do have more, does it automatically get sold or is there a process to handle that? And there again, how does it work in terms of the non filing spouse as my wife will stand there and say she bought the ipads or whatever and no one is taking them. She is difficult. LOL

If I did have to do this I'm really leaning towards a chapter 7 as I don't think I would make it through chapter 13 with my wife as she won't respect it all. With a chapter 7 its over and done.

To the extent that you can demonstrate the portion of her income that goes to her sole creditors, that should be fine. This is called the marital adjustment. It will be scrutinzed.

No. Unsecured debt does not mess up the means test at all, unless you're trying to file a Chapter 13 and your unsecured debt exceeds something like $350K or so. Otherwise, unsecured debt is not an issue since the debt would be discharged. Since you can't use it as an expense on the means test, do not assume that the monthly payments are allowed expenses in bankruptcy.

You should include what you would normally do while staying within the guidelines.

Very good.

"Everyone just claims the 1000 exemption" really underestimates how much impact that has. If you are keeping your homestead exemption, the Trustee still expects that you have more than $1,000 in "all" furnishings. Unless your home is underwater (has no equity), you will not be able to claim the "unused" homestead exemption (of $4,000). Because you are filing single, you don't get to double the exemptions. Additionally, what's mine is mine and what's here is hers can become problematic when valuing property.

As I wrote, if you claim the homestead exemption (are keeping your home), expect that the Trustee will not like to see that "all" your property is only worth $1,000. Even in a 2,000 square foot home, you have more than $1,000 in clothing, pots and pans, dishes, televisions, media (dvds/cds/books), furniture (beds, mattresses, dressers, tables, chairs, etc), computers (iPad, laptops, desktops), cellular phones, clothing, shoes, and other items.

If you write that you only have $1,000 worth of property, and you are declaring the homestead exemption, it is highly likely that the Trustee will send and auditor to your home to value your property.

[justbroke]

so thats the issue with her stuff, she obviously has certain things like a car, student loans, credit card debt that is her own, but she also just takes 200 every two weeks to a separate bank account. Can I exclude that? I could die on the curb and she wouldn't give me that money. I've pled with her as we've put things on credit cards while she is buying nonsense with her private money.

You can exclude any expenses that she has using the "marital adjustment." The Trustee may (or may not) dig and ask about the $200 every two weeks. These are questions that are too fact-specific and case specific. Perhaps the Trustee would see that $200 as spending money for some purpose. Your attorney should be able to guide you where the line exists, if there is one.

As for the unsecured debt messing up the means test, i meant as far as triggering the ability to do chapter 7 or not. my understanding is that if the expenses go on a credit card, they wouldn't be expenses that couldn't be used towards a creditor in chapter 13.

No. Unsecured debt which is discharged doesn't affect anything. There are no financial limits for Chapter 7 other than that you can't have more than about $250/month in disposable monthly income (DMI).

As for the you should include what you normally do while staying in the guidelines. Are you saying that I can't add in normally allowable expenses even if we don't use those now? So if I don't use entertainment now or drycleaning now because I can't afford it, you are saying I can't add it to expenses?

Yes. Please realize that they still have to be within the guidelines.

So how do people handle the 1000 dollar exemption then? Obviously we have ipads for the kids and furniture, but nothing that is worth trying to sell and the kids actually need them for school etc. If you do have more, does it automatically get sold or is there a process to handle that? And there again, how does it work in terms of the non filing spouse as my wife will stand there and say she bought the ipads or whatever and no one is taking them. She is difficult. LOL

First, the Trustee can deal with difficult because they have incredible power. If she gave an iPad, for example, to you as a gift then it is yours and not hears; regardless of who purchased the gift.

They don't try to exempt more than the $1,000. Then they, or their attorney, negotiate with the Trustee for amounts exceeding the exemption. Let's say that you actually have $2,000 worth of personal property to exempt. You get to exempt $1,000. You then negotiate with the Trustee over the other $1,000. Most will offer a percentage which includes the Trustees cost to liquidate. Plus, Trustees love cash (and other liquid funds) and don't want to sell stuff. But, and be very aware, there are several Florida Chapter 7 Trustees that will just send everything to auction. They'll tell you that if you want it, just bid at the auction. That keeps them out of the negotiation game. Again, this is Trustee and fact-specific. Your mileage may vary.

If I did have to do this I'm really leaning towards a chapter 7 as I don't think I would make it through chapter 13 with my wife as she won't respect it all. With a chapter 7 its over and done.

That is always the issue with marriage and a Chapter 13. I had issues because my... let's just say "non-cooperative" spouse just wanted to do whatever including a 2-pack a day smoking habit, drinking habit and other issues. Hence the divorce. Financial stress will often kill a marriage especially where one is oblivious to the facts and is unwilling to compromise.

Best wishes.

[shipo]

anon45, I've been reading about the issue with your spouse indiscriminately spending money which you've earned. If I were in your shoes, and had a spouse who refused to be reigned in, then I'd open a new bank account for myself and put ALL of my money into it. Then if the spouse needed me to hand something over on a regular basis, I'd put her on an "allowance" and call it a day.

[justbroke]

Then if the spouse needed me to hand something over on a regular basis, I'd put her on an "allowance" and call it a day.

That's exactly what I did. It was $160/week (as I earn significantly more than that). If my spouse exceeded that amount, then I would say that they should learn to keep and maintain a budget.

[anon45]

anon45, I've been reading about the issue with your spouse indiscriminately spending money which you've earned. If I were in your shoes, and had a spouse who refused to be reigned in, then I'd open a new bank account for myself and put ALL of my money into it. Then if the spouse needed me to hand something over on a regular basis, I'd put her on an "allowance" and call it a day.

We both work so its her money technically, nothing I can do about it.

[anon45]

As for the trustee, I assume the attorney would or should be familiar with the trustee and know how they handle things?

[justbroke]

As for the trustee, I assume the attorney would or should be familiar with the trustee and know how they handle things?

Generally speaking, yes. They are all attorneys and many of them have works both together and as adversaries. It's a strange system.

[shipo]

We both work so its her money technically, nothing I can do about it.

I don't understand, my thought was for you to put the money you earn into a separate account which she cannot access.

[anon45]

Then I am paying for the house utilities etc because she will take her money. She doesn't care about that stuff.