Does this look like a seven or a thirteen?

[Crozier]

I have $110K unsecured debt, $40K secured in vehicles (w/no equity), and no assets to speak of. I sold my house last year, fearing I was going to be at this point. I make a decent wage ($120K) per year, however, with my wife losing her job last fall, our savings is gone. We survive on my overtime, which is not guaranteed. In your opinion / experience do I look like a seven or a 13? I know $120K is a lot, but after twenty years of dual income, and the cost of living in So Cal, $120K could very well be the median. Also, does anyone have any "watch out for this or that" advice? I meet with the first of three attorneys tomorrow. This truly is one of the hardest things I have ever contemplated. Thanks for any and all replies and advice.

[JRScott]

Vehicles cost to much for your income, shouldn't be more than 15% of your income including their maintanence and insurance.

Ultimately you don't provide enough information though. I believe 120k is above the median in California but that doesn't mean you wouldn't qualify you just have to complete the entire means test.

[MrJames]

CA median income
California Estimate Margin of Error
Total: 64,563 +/-413
2-person families 60,032 +/-524
3-person families 64,766 +/-854
4-person families 74,801 +/-868
5-person families 64,132 +/-1,356
6-person families 61,348 +/-1,096
7-or-more-person families 68,030 +/-2,050

so if you make $120k per year your only option may be chapter 13 bk
Im not 100% sure but I think if you make over the median income you cant file chapter 7..so assuming its just you and your wife the median income for your state is $60,032{seems kinda low for CA} and you almost double that. but then again Im new to all of this so hopefully someone more knowledgable will chime in.
good luck!

[JRScott]

You can file 13 with above median income if you can fill out the means test and pass it (but don't cheat because be ready to prove it as you are high income and high debt which means the UST will be involved).

[Crozier]

It's me, the bride, and two teenagers. I took a means test online, using very conservative numbers, and passed. I was actually kidding about the median. You mentioned the cars being too expensive, do you think I will be forced to sell one or both? At this point, I don't care about either one, I just want a chance for a fresh start. Being in the debt cycle is serious punishment. I recently saw a statistic that nearly 90% of all 7's are approved. Does that sound right?

[MrJames]

I think the best thing you can do is find yourself an attorney. I think most all BK lawyers give a free 1st meeting and will go through things with you to see what you qualify for. I had doubts about my wife and I being able to file for anything but our lawyer says we can do a chapter 7 easily.

[JRScott]

My comment on your cars was just general financial information. My advice would be to get rid of them in the bankruptcy.

Well if you think you have a chance after doing the means test it is best to go see 3-4 lawyers in your area and see what they think. They'd be far more familiar with local rules.

[2manybills]

Also, you may want to read some articles on the ************************ There are current articles about So. Cal. Courts allowing high expenses for cars, boats and the like as secured debts to be used in the means test.

[tsharpe1992]

I am in California. I was about to file a Chapter 7 petition today but because I would lose too much due to how assets were calculated I did not file. My attorney stated that my Roth IRA of $9000 would be subtracted from my $25,000 wildcard exemption which would leave me with $16,000 remaining on the wildcard exemption.

Because of other assets totalling $20,000 + the 9,000 IRA, I have a total of $29,000 in assets. When you put the $25,000 wildcard into the equation, it looks like this $29,000 in assets - $25,000 wildcard exemption. The Trustee would be able to take $4000.

As I am asking around, I am finding out that my attorney could have incorrectly told me that the IRA would be counted against my wildcard but my financial advisor showed me a statement that according to the new bankruptcy law that IRAs are exempt.

Is there anyone who might be familiar with Chapter 7 bankruptcy in California and whether or not IRAs are exempt or not so that I can bring it to my attorney's attention.

[ready2puke]

Well I've read that they are, but my attorney has told me he has seen where they do take it on occasion. There are two parts to Ca exemptions...on the first one it states IRA's and pensions are exempt. On part 2 no mention of it...screwy isnt it?

[Crozier]

Spoke to attorney number 1 today.

Intersting meeting. Said I could qual for a 7 after doing some rough calculations. My retirement plan was exempt (apparently they are safe up to one million). I mentioned that my wife had a wedding ring worth a few thousand bucks, not suprisingly, the atty said it could be subject to surrender to the trustee. Please tell me the court has a tiny bit of compassion for sentimental items like wedding rings. I know excess "bling" will be questioned, but a wedding ring? Anyone? Meet with atty #2 and #3 next week. Wish me luck.

[StartingOver08]

Get a 'quick sale' value of the wedding ring.

Most of us have a tendency to believe things we own are worth more than the market will actually bring. In your case you might be happy to find out the ring is only worth a 'pawn shop' type value of a couple of hundred dollars.

There is no compassion on the part of the Trustee's - just business. The Trustee is looking for assets of any type to liquidate to give the money to creditors. Also, the Trustee makes a commission on anything they can find in your estate. You will need a good attorney.

I had high unsecured and secured debt too (filed on $1.0 M) and was able to file a successful Ch 7. But the UST was involved due to the size of the debt (and probably because I have a small business). Believe me, the Trustee was looking everywhere for assets! LOL There were none that weren't upside down!

So it is possible to have a successful Ch 7, just have documentation for everything.

[Amy26]

Its funny when I was at my 341 meeting, I was almost last... so I got to hear a lot of cases. The trustee was always asking about cars.... "Are you keeping your BMW?" I couldn't believe how many people filed owning BMW's and then got to keep them... so, who knows. Course, not knowing these people, the BMW's could have been like 20 years old...but knowing the area I live in, probably not.

[JRScott]

Intersting meeting. Said I could qual for a 7 after doing some rough calculations. My retirement plan was exempt (apparently they are safe up to one million). I mentioned that my wife had a wedding ring worth a few thousand bucks, not suprisingly, the atty said it could be subject to surrender to the trustee. Please tell me the court has a tiny bit of compassion for sentimental items like wedding rings. I know excess "bling" will be questioned, but a wedding ring? Anyone? Meet with atty #2 and #3 next week. Wish me luck.

Good Luck sounds like you've got a good start

[JRScott]

Its funny when I was at my 341 meeting, I was almost last... so I got to hear a lot of cases. The trustee was always asking about cars.... "Are you keeping your BMW?" I couldn't believe how many people filed owning BMW's and then got to keep them... so, who knows. Course, not knowing these people, the BMW's could have been like 20 years old...but knowing the area I live in, probably not.

It's possible that without the BMW payments they would be chapter 13s rather than 7s and no doubt some are gonna dump them once they get their bankruptcy by not signing the reaffirmation agreements...