Met with Lawyer, not sure what to think! HELP!

[Wantmypeace]

So, we met with a lawyer today to see about filing ch7, but ch 13 if necessary. Basically, he told us that we may not pass the means test. He's going to have to run the numbers and see what he can "wiggle." If we don't pass the test, we want to file ch 13; however, because we have 250,000 (combined) in student loan debt added to our unsecured debt (70,000), we will be over the allowed amount of debt for a ch 13. He was at a loss for what we could do if we don't pass the means test for ch 7. We can't count the student loan debt in our means test, but it counts against us for filing ch 13. So, basically, we may be stuck. If neither option works, we can stay current on our house (underwater) and our automobiles (underwater, also), so we can keep them, and just not pay the credit cards. Then, the credit card companies will sue us and basically start a line to garnish our wages. The good news in all of this is that by law, there can only be ONE company garnishing our wages at a time, and it can only be up to 25% of our income (according to the lawyer). So, worst case scenario, we live off of 75% of what we make for the rest of our lives and never have good credit again because it will probably take the rest of our lives to pay off the debt in this 25% wage garnishing scenario. The last possibility neither the lawyer nor we liked, and that is a ch 11. We CAN qualify for that, but it is really expensive, and he thought it was a bad idea, as well. So, here we sit waiting until Friday when he will give us the "word" on whether we can pass the means test or not (for a nominal fee of 300.00 that will count toward the bankruptcy fees should we qualify to file).

Please tell me there is hope in this somewhere. It feels very hopeless right now...

(wimper)

[liz417]

I would consult with a few more attorneys before you decide on this one, I hope you didn't give him the $300 bucks to run the means test yet. I consulted with 6, before I went with my current attorney, who was the only one that ran the means test while I waited in his office. All the other attorneys told me ch 13 only.

Are you above the median for your state?

Try this site and run the means test yourself: www.legalconsumer.com

[Wantmypeace]

I did give him the 300 because I have run it online on a few different sites, but he has the program that the trustee actually uses, so I figured it might be worth letting him see what he can work out. I figure that if he can't make it work, I certainly can't, and he charges the same whether it is a ch7 or a ch13, so at least I know that he's not going to steer me one way or the other to make more money.

We are above the median income...so, that's problematic...

I do wonder if I shouldn't check with more attorneys. It is very time-intensive and emotionally exhausting to go through all of this over and over with each new attorney, but I may have to...

[JRScott]

Are your student loans real student educational loans or personal loans?

This is a major problem young people are running into. They find easy credit to get them through college, then are saddled with such a debt burden they cannot pay off because they cannot make enough. Six digit student loans generally require a six digit income to pay off in 30 years.

However not always are these 'student loans' the protected type of loan, and if their not in your case there might be a window of hope to get rid of some of them.

[keepmine]

Worse case and, a bk filing can't help at this time is, ask your student loan servicer to start administrative garnishment. May as well get them at the head of the pay window if you're gonna get garnished.

[Wantmypeace]

Yes, they are the government backed loans. For us, they paid for a combined total of 17 years of college (2 BA's, 2 MA's, 2 teaching credentials, 1 admin credential). Gotta love teaching! LOL! With the amount of education we both have, we should have chosen to become lawyers instead of teachers....ha! Anyway, If we are unable to file anything, I will definitely do what you suggested and ask them to do a wage garnishment for hte student loans. That would mean all the others would have to wait in line for 25 years. My guess is they would write them off. Anyone else have thoughts on this? I didn't know you could "ask" a company to come after your paycheck for a wage garnishment before you are past due or anything. Anyone done this?

[DeadManCrawling]

Here's an idea:

What about filing as individuals? That would make your debts fall within the parameters wouldn't it?

Or have one person file a 7 and the other a 13 to keep any items you need to?

Not sure if this is feasible, but it seems there should be SOME way for you to proceed.


As far as the garnishments:

Agree-if you are going to get a garnishment, try to make sure it is from teh student loans, since they can't be discharged anyway.

No point in paying unsecured non-student debts.

At some point, I presume, the student loans will have been garnished enough to get you in the zone for filing, by whittling down the number over time.

[liz417]

I did give him the 300 because I have run it online on a few different sites, but he has the program that the trustee actually uses, so I figured it might be worth letting him see what he can work out. I figure that if he can't make it work, I certainly can't, and he charges the same whether it is a ch7 or a ch13, so at least I know that he's not going to steer me one way or the other to make more money.

We are above the median income...so, that's problematic...

I do wonder if I shouldn't check with more attorneys. It is very time-intensive and emotionally exhausting to go through all of this over and over with each new attorney, but I may have to...

No, being above the median is fine as long as your expenses outweigh your income. Did this attorney say that your Student Loans could be used in your expense sheet (that would help a lot )? I got conflicting answers when I consulted with attorneys, but ultimately we put the loans into the expense sheet. I understand how exhausting it is to "interview" attorneys, at first I was embarrassed repeating my "mistakes" over and over, but after the 3rd inteview, I toughen up a bit and said, "this is my problem, do you think there's going to be a problem with objections?" It is important to find an attorney that is going to represent you the best, so while you are waiting for 1st attorney's answer, I would set up a few more consults and see if they have anything different or new to add.



Good Luck!

[Wantmypeace]

Thanks!

You are all so helpful! Thank you!

I will set up a few more consults. This attorney said we cannot include the student loans in the means test, but he is going to do some research and see what else we may be able to do.

He did say that the trustee for our district is a extremely meticulous and particular about everything.

We are in California, so everything is community property. Filing separately would be just about impossible. Kinda sucks...

I *am* going to look into the student loan wage garnishing issue...

[keepmine]

Yes, they are the government backed loans. For us, they paid for a combined total of 17 years of college (2 BA's, 2 MA's, 2 teaching credentials, 1 admin credential). Gotta love teaching! LOL! With the amount of education we both have, we should have chosen to become lawyers instead of teachers....ha! Anyway, If we are unable to file anything, I will definitely do what you suggested and ask them to do a wage garnishment for hte student loans. That would mean all the others would have to wait in line for 25 years. My guess is they would write them off. Anyone else have thoughts on this? I didn't know you could "ask" a company to come after your paycheck for a wage garnishment before you are past due or anything. Anyone done this?

Gov't backed student loan servicers don't have to sue you. They can garnish you adminstratively if you default. If you call them and explain your situation they'll be happy to take your money as opposed to letting a credit card company get it.

[Wantmypeace]

Yah, I think I will definitely do that if there are no 13 or 7 options for us. Heck, why not!?