Chapter 7 or 13?

[benniebear]

I have been working with an attorney to file for Chapter 13.

I just found out yesterday that I have a bulging disc and other neck / back related problems which will require me to go on disability for a minimum of 2-3 months. This should turn in to long term disability since my job is 100% computer work. It is very likely I won't be able to return to the industry I am in.

My question is if I should file Chapter 7 instead? Other than my home (which has no equity) which is in foreclosure right now (I am surrendering the house as part of my bankruptcy and I can not afford it), the only asset I have is value of my car. The value is about $20,000. I don't know the wildcard exemption for California but I am hoping a large amount of the $20,000 can be exempted.

Based on the vast amount of experience on this forum, I would appreciate any inputs on whether filing Chapter 7 could be an alternative for me considering the above scenario.

Thanks!

Shelly

[JollyGG]

You may have to wait six months for you income to fall below the median for California. But otherwise it sounds like a chapter 7 may be a possibility. Have you talked with the lawyer about your situation?

Here is a link to an online means test that can give you a basic idea as to where you fall http://www.legalconsumer.com/means-t...ator/index.php

[lrprn]

JGG already gave you good advice - wait until your income drops below the CA median for the required six months lookback, then file Ch 7. Since you've already surrendered your home and only want to save your car, that will make that possible. It sounds like you may be a single person - if you are, then the CA annual median income for one earner is $44,499 - http://www.usdoj.gov/ust/eo/bapcpa/2...come_table.htm

the only asset I have is value of my car. The value is about $20,000. I don't know the wildcard exemption for California but I am hoping a large amount of the $20,000 can be exempted.

CA uses a two-tier bankruptcy exemptions system -you can choose one or the other - http://www.bankruptcyaction.com/caexemptions.htm . System 2 has a wildcard of $21,825 if you use it for nothing else, so that *may* protect your car.

How much do you currently owe on your car? And where did you get $20K as your car's value from?

[benniebear]

I don't owe anything on my car and my attorney gave me the value of my car. He probably used Kelley Blue Book or something similiar.

Well, that is not good news that I would need to wait six months. I thought that during the 341 meeting you have the opportunity to discuss with the Trustee why your filing Chapter 7 versus 13? It seems like if I become disabled that somehow they take that into account when doing the 6 month look back?

I have a call into my attorney but haven't heard back from him yet. I also emailed him so hopefully he has a good idea.

My thought (uneducated thought in this area) was that I could wait a couple of months, file, and explain my disability status with the Trustee. I stopped paying my home mortgage a couple of months ago as I am surrendering the house, in fact, am moving this weekend. I know I could have lived here mortgage free for a few months but didn't want to go through the hassle of potentially not getting rented to. I also stopped paying my credit cards.

Wow. I am hoping there is something I can do. It seems ridiculous to file a Chapter 13 (payment would be $1200 month) when I know I will be starting disability in a couple of weeks and my income will change.

I don't know much about this but isn't disability income considered exempt?

Thanks for the help!

Shelly

[lrprn]

Well, that is not good news that I would need to wait six months.

You may not have to wait six months.

Assuming you are single and have no other dependents living with you, you just have to wait long enough after your income starts to drop so that if you add up the last six months of income, your income will be less than $44,499.

I thought that during the 341 meeting you have the opportunity to discuss with the Trustee why your filing Chapter 7 versus 13?

Nope. It's already been decided long before your 341 which chapter you are filing. Trustees usually don't ask why you have to file. The vast majority of 341 meetings take less than 5 minutes and you answer the trustee's questions - that's all.

It seems like if I become disabled that somehow they take that into account when doing the 6 month look back?

Nope. Bankruptcy follows the law, not individual circumstances.

I have a call into my attorney but haven't heard back from him yet. I also emailed him so hopefully he has a good idea.

My thought (uneducated thought in this area) was that I could wait a couple of months, file, and explain my disability status with the Trustee.

I'm so sorry to have to be the bearer of bad news, but the bankruptcy system just doesn't work this way.

It seems ridiculous to file a Chapter 13 (payment would be $1200 month) when I know I will be starting disability in a couple of weeks and my income will change.

Agreed! That's why it's best to wait a while longer so your income drops enough to be able to file Ch 7 instead.

I don't know much about this but isn't disability income considered exempt?

Depends on the kind of disability and your state laws. In most cases, the answer is going to be that your disability income will be exempt. Ask your lawyer about this.

Hope this helps, Shelly!