Asset vs non-asset

[DadTL]

Have a meeting w/lawyer tomorrow. I spent 2 1/2 hrs with his paralegal Monday. With my income only (to which she added rental income and did not take into account the mortgage payment on every one) she said we would have to come up with more deductions. When I did the means test at legalconsumer.com, we were over $1000 in the hole per month for Dec-May and over $600 in the hole for Jan - June per month (worked a lot of ot recently and I know roughly what my pay will be).

Anyway, we are giving up our home, all 6 rental properties, and only want to reaffirm my wife's van for her and the two kids. Giving up my 2 yr old truck and keeping a paid for 98 Stratus for me. We have about 77k in unsecured debt as well.

What is the difference in asset vs non asset? Does the difference come from trying to retain something of value that has a secured debt such as our van? Or does the asset have to be in the form of real estate?

I did try to search for the definition of the terms, but couldn't find it.

Thanks
DadTL

[keepmine]

As far as the definition as it pretains to bk.
An asset bk means, you have assets above the level that your state allows you to exempt.
In many districts, if you give up your home. you can't use the mortgage payment as an expense.
However, you need to live somewhere so, you will have the expense of renting a place plus, the expense of utilities, cable, ISP,etc.
Does your wife work? Are you filing jointly?

[DadTL]

We are filing jointly, she does not work. And I took the allowable expense on legalconsumer.com's means calculator as our expense for somewhere to live. I won't be able to lease a house in an area I would actually live for that, but I still pass the means test with what they give me.

Thanks for that explanation.

DadTL

[Cali]

My rent is more than allowed for my area. I used the allowable amount on the means test and the actual amount on Schedule J.

We are filing jointly, she does not work. And I took the allowable expense on legalconsumer.com's means calculator as our expense for somewhere to live. I won't be able to lease a house in an area I would actually live for that, but I still pass the means test with what they give me.

Thanks for that explanation.

DadTL

[CindyLou]

If greater than 50% of your debt is business debt (rental properties qualify) then you don't have to pass the means test!

[Help!]

OP - when you say you need more "deductions", do you mean you don't have enough expenses on schedule J and are showing a positive net monthly income or do you mean you fail the means test? Be sure to give yourself the IRS Standard amounts (food and clothing, transportation, medical, health insurance, etc.) even if you don't spend that much. I found an excellent article on the means test. It's huge, but it answered many of my questions when my lawyer couldn't:

http://www.law.siu.edu/research/31springpdf/tab.pdf

I seem to remember you being above the median in income. In our case, this caught the attention of the UST and we now have to explain (with receipts) those expenses the paralegal "came up with". This is not meant to scare you or to discourage you from filing 7 - just to help you prepare in case you're asked. Good luck!

[DadTL]

Thanks for the replies

When I said deductions, I meant expenses. We met with the lawyer today and he looked at everything we had and everything that his paralegal prepared for him from our visit Monday. He said he doesn't see a problem with us being able to file c7, especially after taking into account over the lat 6 months our rentals not only did not make a profit, but we are well in the hole just comparing what we paid in mortgages vs took in rents. When I did the means test online myself, I just used the allowable expenses for rent, utilities, food, clothing, etc. Just about the only expenses that I manually input were my income taxes, health and disability insurance, mandatory retirement, items that are easily accounted for just by loking at the deductibles on my paychecks. Oh, we did include the note on my wife's van. I felt good about this lawyers confidence. I did ask him about the trustees around here. He said some are good, some are bad, assuming he means how picky they are.

He did comment on how well prepared we were and he appreciated us having everything in order and ready for him when he needed it. I will have to give a big thanks for this forum for everything I've learned in the short time Ive been reading.

Thanks again.
DadTL