HELP!! I don't know what to do! - High Income - Ch 7 or 13

[coit]

I just had a nightmare meeting with attorneys regarding my PLAN to file Chap 7. I was basically told that they wouldn't represent me because of my family income (~$95K).

My secured debts:

Home: 1st and 2nd $190K on $200K home / pmts $1900 per month inc taxes and ins
Auto: $15K loan on $16K value vehicle

My unsecured debts:

About $70K
One recent charge of $2,000, which I presumed I would have to repay.

So, I just feel helpless right now, because I thought I would be OK with the 7.

They said I would probably be stuck with a 100% Ch 13, which would put my payments at $1800 or so. Based on my actual monthly household cash flow, there is no way I could afford that. They said my actuals are not realistic, and would not be acceptable to the trustee.

Here's the details of that (family of 4):

Takehome: $5500

Mtg: $1950
Auto: $422
Gas: $200
Car Ins: $100
Home Utils: $300
Phones & Internet: $150
Cable: $70
Security: $20
Groceries & Household: $1200
Clothing: $200
Dry Cleaning: $50

With other stuff, about $4700 per month.

Net: $1800

These values are based on actuals from my household over 2 years... Maybe these are high, but we live an active lifestyle (kids in sports, on the go), but we certainly do not live extravagently, do not travel, etc. etc. This doesn't even include things like gifts throughout the year and the holidays, nor does it include the costs of my kids activities, which are about $100 per month....

I am completely freaking out! Right now, I'm thinking of filing Ch 7 myself, using the Form 7 software, and crossing my fingers. This experience was not anything like I had expected, based on reading stuff here.

Does anyone have advice for me????? Encouragement??? A winning lottery ticket??? I am desperate for anything anyone can offer from their experience. I am in North Atlanta area.....

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I should also say that I am current on every creditor except for two Credit Cards ($25K balance, 5 months behind & $37K, 1 month behind).
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Thanks!

[Teri]

what state are you located in? We used form7.com. Our income is $110,000 for a family of seven and your expences look okay to me, in fact low in some areas. Our gas for the month is $800. Although we work 40 miles from home and our son goes to school 20 miles from home. The trustee may throw ours out too...who knows?

[concerned]

Teri,

We broke down many of our expenses by using our on line banking feature to categorize our expenses. It was very tedious and time consuming, but it was helpful in that we discovered expenses we hadn't thought of, such as: bank fees, charity costs, magazine expenses, school supplies, hair cuts, counseling services, etc. You might want to start by breaking down your grocery expense further--just a thought. Many things we had just lumped together. I am very new to all of this and I am not sure which is better, to be more specific or generic. I am not an attorney. My husband and I are just going through this process ourselves. Like you, we have high income. One thing I requested, which finally worked, was to request that they file an emegency petition before Oct. 17, and then ammend it later. It worked! We meet with the attorney tomorrow. Good luck to you.

[StaciMM]

What you listed leaves $800 remaining ($5500-4700) so you would not be allowed a ch. 7 discharge as you have available $$. I've listed a few notes about your expenses. One thing-its probably best not to lump too much in w/ groceries. Rather, on the last line of the schedule indicate a 'misc' and you can reference an additional sheet to break it down if needed.

Some attorneys shy away from 'high' income. But depending on cost of living where you are, it may not be that different from someone somewhere else earning $50-60,000/yr. How does your mortgage/utilities compare to your area?

I just had a nightmare meeting with attorneys regarding my PLAN to file Chap 7. I was basically told that they wouldn't represent me because of my family income (~$95K).


Here's the details of that (family of 4):

Gas: $200 Is this realistic w/ current gas prices? Does it include routine maintenance, annual car tag, etc. (It seems a little low to me)
Home Utils: $300 Is this realistic year round? Keep in mind gas is rising
Groceries & Household: $1200 If this includes cleaning supplies, home maintenance it may be reasonable. Ours is $725 total, but we rent-so no major home maintenance, and our kids are small so our grocery bill will go up in time

With other stuff, about $4700 per month. What about entertainment, kids activities as you mentioned below, school supplies & expenses, pet care if applicable? Including something moderate for gifts/holidays should be ok. Do you have student loan payments?


Thanks!

[Lightning]

Things like internet access, cell phone plans, after school activities, and monitored security are not necessities. They are luxuries. To say that you do not live extravagantly is not entirely accurate.

There are many people here earning far less that do not spend money on such things. This is likely one of the reasons bankruptcy reform was enacted. One's income should not dictate one's allowable expenses. If that were the case, a family of 4 who earns $100,000 a year should be allowed to have a nicer home or apartment than a family of 4 who earns $25,000 a year when both families are claiming to be "broke".

[coit]

What you listed leaves $800 remaining ($5500-4700) so you would not be allowed a ch. 7 discharge as you have available $$. I've listed a few notes about your expenses. One thing-its probably best not to lump too much in w/ groceries. Rather, on the last line of the schedule indicate a 'misc' and you can reference an additional sheet to break it down if needed.

This part is confusing to me. The $800 surplus would be what I would have AFTER discharging debts in Chapter 7. Currently, I am about -$600 per month or so, based on the past 2 years records.

I would think anyone would have money remaining after they discharged debts, isn't that the whole point? My head hurts.

I guess I've missed something along the way. I suppose that I'm doomed to a Chapter 13, and to live the next 5 years of my life with absolutely no extra money.

I wish I was entitled to the fresh start that so many others are....

[StaciMM]

If you have income remaining, it can go into a ch 13 to repay part of your debts. That is generally better than paying all (plus interest & fees) for 10-20 years. Ch. 7 is for when you don't even have that ability.

If you can somehow manage to file by Friday, you would likely end up in a plan for 3 years. You could even file an emergency petition, mainly just the cover, and have 2 weeks to get the rest in.

Edited to add the $2000 recent purchase wouldn't be a problem for ch 13.

[Lightning]

I would think anyone would have money remaining after they discharged debts, isn't that the whole point?

This is a mystery to me as well.

If a person (or household / family / etc.) is listing expenses that exceed their income even without paying on debts, how can bankruptcy help? They'll just go back into debt either with credit cards or by borrowing from family to make ends meet. If they're actually able to pay all their expenses with their income without using credit, then that would mean they lied on their bankruptcy application.

Perhaps someone can explain this to us.

[hhou812hh]

[QUOTE=coit]I just had a nightmare meeting with attorneys regarding my PLAN to file Chap 7. I was basically told that they wouldn't represent me because of my family income (~$95K).

My secured debts:

Home: 1st and 2nd $190K on $200K home / pmts $1900 per month inc taxes and ins
Auto: $15K loan on $16K value vehicle

My unsecured debts:

About $70K
One recent charge of $2,000, which I presumed I would have to repay.

So, I just feel helpless right now, because I thought I would be OK with the 7.

They said I would probably be stuck with a 100% Ch 13, which would put my payments at $1800 or so. Based on my actual monthly household cash flow, there is no way I could afford that. They said my actuals are not realistic, and would not be acceptable to the trustee.




Where did you get 1800 a month from? It would be 1800 for a 36 month plan. Under current law you can pay no less then 36 months, no more then 60 months. New law next week is 60 months unless you pay 100% sooner. No more 36 month.

Anyway based on 70k in debt your payments will be about 1167 per month for 60 months. After this you're done! No interest, fees, etc.



I wish I was entitled to the fresh start that so many others are....


I understand you want your debts to go away, who doesn't? Bk is like a school lunch program or a welfare program where those with little or no means get better benefits from it. To be "entitled" to the "fresh start" like others you can do it by getting a job as a Walmart cashier. It seems silly to feel this way. You make a decent income that you pretty much worked hard to get. Most people would rather have a high income.

I too came here a few months back hoping to qualify for a ch7 and after reading some of the threads and seeing the REAL problems some folks have I'll take a 5 year ch13 anytime, anyday.

Good luck!

[StaciMM]

Our petition is about -$300. I don't mind answering your question. Some things in a household budget take less priority over others and therefore don't happen. Some things that you should do monthly get put off to every 2-3 months. (By the way, we credit cards are a small part of our BK so we haven't been living on credit. We have enough income to make the necessities, but when DH's paycheck was garnished-we couldn't afford to give up several hundred a month. I have reason to expect my income to rise by about $300-400/mo soon gross and at that point, we won't have to cut back in so many areas.)

My student loan payment of $124 has been past due or in deferrment for all but 2 months of the past year. After the auto. stay is lifted, that will have to get some priority-if possible-as I don't want any lates post discharge. Our budget includes clothing for $150/mo (family of 5 w/ 3 kids 7 & under) yet we have no choice but to skimp on that. In that category, we get what we HAVE to and family has been alerted to concentrate more on clothes than toys for birthdays/Christmas. Recreation/Entertainment we listed $100, but there is generally no $$ left for that category. Our last 'entertainment' was going to the drive in theatre, $12 for 2 adults... Home maintenance is $75/mo, but some things have been put off. (Such as fertilizer, grass seed for the yard.) Laundry & Dry Cleaning I listed $35, but if it needs to be dry cleaned, its sitting in my closet. I've only been wearing what I can wash. (And a big cheap bottle of detergent can last a month when you sort & only do full loads.) I listed $30/mo for vehicle maintenance-but due to $$ constraints vehicles are LONG overdue for oil changes and the truck has needed tires since March. (Not exagerrating.) Now that we've decided to turn it in, I'm really glad we didn't replace them.

We generally get a moderate tax refund from child tax credits, and that goes to things like paying ahead auto insurance or utilities to try and ease $$ for a couple of months.

I imagine some people whose budgets are upside down use their cards for a while (for groceries, living expenses, etc.) hoping & expecting that their income will go up so they can start to make headway. But, if you're paying $500 in minimums and putting $800 in monthly expenses on the card, that isn't likely to happen.

This is a mystery to me as well.

If a person (or household / family / etc.) is listing expenses that exceed their income even without paying on debts, how can bankruptcy help? They'll just go back into debt either with credit cards or by borrowing from family to make ends meet. If they're actually able to pay all their expenses with their income without using credit, then that would mean they lied on their bankruptcy application.

Perhaps someone can explain this to us.

[coit]

I apologize if I have offended anyone with my characterization of my situation.

I do not live an extravagant lifestyle, but I do indulge my children with many extracurricular activities. My two cars are 6 and 10 years old.... My house is significantly less expensive than others that I am contemporary with.... However, as you have pointed out, I am very fortunate.

I have read several stories here where people with six figure salaries have filed Ch 7, and spent a grand total of 5 minutes with their trustee. I suppose they are the lucky ones.

I guess I'll bite the bullet, and file Ch 13. I don't have a problem accepting responsibility for the debt. I just have a problem not being able to take advantage of the process as others apparently have.

Thanks!

[Lightning]

StaciMM:
I still don't understand. If you listed your expenses at +$300 over your income, how do you make ends meet without borrowing money?

If your income now equals your expenses, then how could you tell the trustee that when you filed your expenses exceeded your income?

[StaciMM]

A budget is a plan. Some plans don't always work out as you want them to. Some things get put off til the following month (or family helps with them) if we don't have money left at the end of the month to cover it. We try not to put the same things off twice in a row. Its a minor example, but I should get my hair cut every 1-2 months. My last hair cut was probably a year ago.

I know that in time, our finances will improve. We are not digging ourselves deep into debt, but we're doing without in some areas as other things take higher priority.