Considering filing and have several questions

[sean]

I am thinking about filing, but haven't made a decision yet. Right now, my income is under the limit for Ch. 7, but I will receive a yearly bonus in about a month that will probably put me just over the limit.

1. Can student loan payments be considered as an expense for the means test? I know they can't be discharged, but I thought I read that they can help pass the means test.

2. Is there any chance of keeping a vehicle that is worth about 15k and owned outright?

3. What about a wedding ring that was bought a little over a year ago for 6k and paid for with a credit card that still has a balance.

4. I'm expecting a tax refund of about 5k. What should I do with this money? I currently have a 401k loan of 4k, and I thought that 401k accounts were exempt, so I'm wondering if it makes sense to pay back this loan? If not, what should I do with the cash?

5. We have a 220k mortgage and a 60k equity line(maxed). With the current market, I'm guessing our house is worth no more than 250 to 260. Do we need to get it reappraised to show that we have no equity? If we have negative equity, can we do anything about the equity line? Or are we better off to just continue making the mortgage and equity line payments.

[justbroke]

I am thinking about filing, but haven't made a decision yet. Right now, my income is under the limit for Ch. 7, but I will receive a yearly bonus in about a month that will probably put me just over the limit.

You should think about filing before the bonus.

1. Can student loan payments be considered as an expense for the means test? I know they can't be discharged, but I thought I read that they can help pass the means test.

2. Is there any chance of keeping a vehicle that is worth about 15k and owned outright?

Ummm... not unless your State has an exemption which covers that. Most States do not have enough in the vehicle exemption or any wildcard exemption to cover such equity!

3. What about a wedding ring that was bought a little over a year ago for 6k and paid for with a credit card that still has a balance.

Depending on your State, you maybe able to exempt the whole ring, or some part under an exemption. For example, New York State exempts the entire wedding ring... even if it's $1,000,000.00 in value!

4. I'm expecting a tax refund of about 5k. What should I do with this money? I currently have a 401k loan of 4k, and I thought that 401k accounts were exempt, so I'm wondering if it makes sense to pay back this loan? If not, what should I do with the cash?

Yes, 401(k) accounts are exempt and they can't touch that loan. They may not consider your 401(k) payments as an expense under the means test... this varies by District. Again, unless you have an exemption in your State which covers cash (or a wildcard which covers cash) -- noting that cash is "personal" property -- you will have to turn that over to the Trustee, unless you spend it first... on things like your lawyer, buying food, getting needed medical work done.

5. We have a 220k mortgage and a 60k equity line(maxed). With the current market, I'm guessing our house is worth no more than 250 to 260. Do we need to get it reappraised to show that we have no equity? If we have negative equity, can we do anything about the equity line? Or are we better off to just continue making the mortgage and equity line payments.

You don't need to get an appraisal unless the Trustee orders it. You should get a CMA (comparative market analysis) or use some other valuation method, as you need to put the "estimated" value into your petition. If the Trustee thinks there is money to be had, s/he will order a full appraisal.

[sean]

[MajorMike]

In New York:

Cash (including savings bonds, tax refunds, bank & credit union deposits) to $2,500, or to $5,000 after exemptions for personal property taken, whichever amount is less (for debtors who do not claim homestead)

Here is a list of all the states:

http://www.legalconsumer.com/bankruptcy/laws/