Really looking from some advice here.

[rykk2000]

I could really use some ideas as to what I can do in my current situation. In Sept '08 I made, what I thought was the only solution, the decision to sign up with a debt settlement company. I went from never missing a payment to not making a payment at all. This was a very hard thing for me to do because I would rather not have lunch and dinner for weeks at a time in order to pay my bills. I put 8 CC's on the program and they totaled about 55K. The cards were from companies such as CITI, GE Money, Amex, & HSBC. Well recently I was sued in small claims court by one of my CC's for the smallest amount card, served via mail (not certified) and I now have a judgment against me and my wages are going to start being garnished at 20% starting on my next paycheck. Well, I do not feel as though the Debt Settlement decision was the best one for me, especially since they have done nothing for me but have me send out letters. Now since I have not made payments for the past couple of months I have destroyed my credit, although, I am sure my debt to income ratio was doing that already for me. I recently pulled a credit report and I can see that most of my accounts are listed as charged off and one is not (AMEX), I can also see that these 8 cards have increased to about 70K due to fees and interest. Well I am trying to find some other potential solutions because until this debt is taken care of I will not be able to move on with my life (get married, eliminate the stress, be happy). In addition, within the next year and a half, I will start having to repay my student loans (50K+) and I know these are mine to deal with regardless. I recently borrowed from my 401K to payoff my car because my job is very unstable right now and I felt I needed to focus on my protecting my house. In addition, I do have a mortgage and I am current on that and have never missed or been late with a payment. I have tried to do the means test and I am not sure if I am doing it incorrectly or what, but it does appear that, I do not qualify for a Chapter 7. My single monthly net income is about 3600; this is not considering the garnishment. So please I am not sure about potential solutions or alternatives available, therefore, I would really appreciate some ideas. Please if you need anymore info from me just let me know. Thanks.

[eddiep]

I am so sorry that is happening to you. If you do not qualify for chapter 7 you could most likely file for chapter 13. You would still be responsible for paying back a portion of your debt like the DMP you are in but you would be protected from your creditors, your debt would not continue to accumulate interest and fees and your garnishment would stop. In ch13 the court would take you income and subtract your living expenses and the remaining "disposible income" would be used to pay your creditors back in a plan that lasts for 3 to 5 years. It sounds like bk is something you are considering, and from what you say, it sounds like you may have no other choice. You may want to consider getting a free consultation from an experienced bk attorney if you are considering this option. the DMP did not protect you from your creditors but a bk court will. Hope that helps, but nobody can make that decision but you.

[Trixie007]

Wow! If you look at those numbers objectively, your balances have increased almost 30% in just over 6 months??? Absolutely insane. I would think you should start scheduling your free consults with attorneys and find one who can get you into a reasonable Ch 13! As for not getting on with your life - once you figure out the solution, it is such a load off. Make your decision as objectively as you can, figure out the steps, then take those steps but let your primary focus be on more important things! Good luck to you.

[rykk2000]

Well...

Again, I am very unsure that I am filling out the means test correctly, but it may appear now because of the garnishment I may qualify for chapter 7. If I am a salaried employee can I just take my base pay and multiply it by 12 since I get paid twice a month? I did get a bonus at the beginning of the year, which is not always there so does that count?

[eddiep]

You will use the six months income prior to filing when filling out the means test. So if you file you will want to wait until the bonus falls off. There are two test to qualify for ch7 first is the median income test, if you are over median you can take the means test. On the means test you subtract your expenses from your income to see if you have enough disposible income to fund a chapter 13. Try this link http://www.johnfire.com/meanstest/wizard.php

[jribe]

bonuses do count as income. Depending on how large that bonus is; you may want to wait to file until that income has fallen off of your 6 month time frame. Basically if you file July 1st; income is taken from Jan-Jun. So if you file Aug 1, income would go from Feb 1-Jul 31; and the bonus income would no longer be included.

If you are having trouble qualifying for the ch 7; there are expenses that could help you qualify; but you'll need to wait to file. For instance- you said you just paid off your car. That means you don't have that expense (which most people need to qualify on the means test). If you can get a loan back on the car; and put the money back in your 401k that would do the best for you.

You do not want to touch retirement accounts. They are exempt. Also, you did not say when you withdrew from your 401k. That is also included as "income"

Good luck

Again, I am very unsure that I am filling out the means test correctly, but it may appear now because of the garnishment I may qualify for chapter 7. If I am a salaried employee can I just take my base pay and multiply it by 12 since I get paid twice a month? I did get a bonus at the beginning of the year, which is not always there so does that count?

[LenderNoHelp]

In my situation, I too usually receive a bonus in June. This bonus usually is used to pay property taxes. My property tax is paid twice a year so I did not include that payment in my monthly expense. Now, this year we received notice we will not be getting a bonus this year. My diposable income is about $200 w/out considering the property tax expense. Will I qualify for Ch. 13 without the bonus?

[formiker]

Rykk2000, Im new here so I can't be of much help. When I started reading your post I realized it could have been written by or for me. I made the same mistake with a debt "settlement" company. I am now being sued by Chase. I had my first appointment with bk attorney yesterday. Filing ch. 13. This forum is very helpful and supportive. Thanks to all.

[rykk2000]

bonuses do count as income. Depending on how large that bonus is; you may want to wait to file until that income has fallen off of your 6 month time frame. Basically if you file July 1st; income is taken from Jan-Jun. So if you file Aug 1, income would go from Feb 1-Jul 31; and the bonus income would no longer be included.

If you are having trouble qualifying for the ch 7; there are expenses that could help you qualify; but you'll need to wait to file. For instance- you said you just paid off your car. That means you don't have that expense (which most people need to qualify on the means test). If you can get a loan back on the car; and put the money back in your 401k that would do the best for you.

You do not want to touch retirement accounts. They are exempt. Also, you did not say when you withdrew from your 401k. That is also included as "income"

Good luck

I did not actually withdraw from my 401k I borrowed against it. Therefore, I am paying myself back, out of my own pay check, with interest that actually goes to me also. A withdrawal would be very expensive as far as fees and penalties go, so I am avoiding that at all costs.

Now the 6-month time frame sparked some questions too. I have the wage garnishment that will be starting shortly, so should I wait for that to occur and maybe even until it has been fulfilled? Then for the "court-ordered" payment section on the Means Test, would this garnishment apply to that? Being salaried I know my income is not going to change for six months aside that it may go down if I need to take a pay-cut. Then if I can take the garnishment into consideration for the means test and that garnishment may last for 3 months, can I still start working with an attorney now?

[rykk2000]

Rykk2000, Im new here so I can't be of much help. When I started reading your post I realized it could have been written by or for me. I made the same mistake with a debt "settlement" company. I am now being sued by Chase. I had my first appointment with bk attorney yesterday. Filing ch. 13. This forum is very helpful and supportive. Thanks to all.

I am very sorry to hear you are in a identical situation. It is no fun to try and do something to resolve your debt, only to have it rejected and make things harder on you. I did meet with a "chain" law firm and I was I could only do a chapter 13 with a payment around $1400 per month for 5 years. Sad thing is this firm did not even ask me about mortgage, car payment, utilities, and any other deductions. I can tell you that it put a fear about chapter 13 in me.

Browsing these forums I have found tons of useful information as well, the one thing about chapter 13 that I am yet to find a clear answer for is if you can pay it off early? What I mean by this is let's say your payment plan is $700 per month for 3 years which would equate to about 25K. So is my goal now to pay that 25k amount off as fast as I can or regardless if you pay more you just pay more and it does not change the plan? I ask this because if I get tax refunds during the chapter 13 timeframe I would potentially use them to pay it off.