Newbie here, freaked out.

[mrval]

Hello everyone.

My wife and I are facing bankruptcy over a failed business venture and a personal guarantee on a commercial lease. We are current on our credit cards, car payments, mortgage, bills etc. Its just this damned lease.

Its looking like we will not qualify for chapter 7 based on out income since my wife is a teacher and I am a laid off teacher who collects state unemployment. Its seeming like chapter 13 may be out only option but we are freaking out because all the calculators say we would have $2400/month in "surplus income" even though we have over $1000/month in student loans and other debt like cars, general living expenses like cell phones etc. We really live month to month.

This is so crazy. We just had our first meeting with a lawyer today, he thinks we may be on the bubble for chapter 7 but since the school district my wife works for pays out on a 10 month plan, then deducts for the summer, her last 6 months pay stubs indicate a higher income than she actually makes. I am afraid we are falling through the cracks.

We are so scared....

Val

[espo1357]

Hello everyone.

My wife and I are facing bankruptcy over a failed business venture and a personal guarantee on a commercial lease. We are current on our credit cards, car payments, mortgage, bills etc. Its just this damned lease.

Its looking like we will not qualify for chapter 7 based on out income since my wife is a teacher and I am a laid off teacher who collects state unemployment. Its seeming like chapter 13 may be out only option but we are freaking out because all the calculators say we would have $2400/month in "surplus income" even though we have over $1000/month in student loans and other debt like cars, general living expenses like cell phones etc. We really live month to month.

This is so crazy. We just had our first meeting with a lawyer today, he thinks we may be on the bubble for chapter 7 but since the school district my wife works for pays out on a 10 month plan, then deducts for the summer, her last 6 months pay stubs indicate a higher income than she actually makes. I am afraid we are falling through the cracks.

We are so scared....

Val

2400/month? where did you get that?

in a 13, the secured creditors will get most of the money (if you want to keep an asset) and you don't qualify for a 7.

see another attorney, because the bk should not make you scared. Instead, the BK should give you a second chance.

the unsecured stuff gets very little in a 13, assuming you don't qualify for a 7 (in a 7, you pay nothing).

good luck and relax. I have been fighting for a few years to save my house and get things settled. Still not there. but, I have learned to relax and enjoy the moments because I have been able to focus on the big picture and I know that my faith and knowledge of my rights will get me through.

[mrval]

Its because her stubs indicate 4900/month, which is not her real income since 400/month is deducted for the summer. This combined with my 1900/month in CA state unemployment. It seems like a lot but we have over 110K in student loans, a mortgage we are upside down on, 2 car paymnts, etc etc.

2400/month? where did you get that?

in a 13, the secured creditors will get most of the money (if you want to keep an asset) and you don't qualify for a 7.

see another attorney, because the bk should not make you scared. Instead, the BK should give you a second chance.

the unsecured stuff gets very little in a 13, assuming you don't qualify for a 7 (in a 7, you pay nothing).

good luck and relax. I have been fighting for a few years to save my house and get things settled. Still not there. but, I have learned to relax and enjoy the moments because I have been able to focus on the big picture and I know that my faith and knowledge of my rights will get me through.

[espo1357]

Its because her stubs indicate 4900/month, which is not her real income since 400/month is deducted for the summer. This combined with my 1900/month in CA state unemployment. It seems like a lot but we have over 110K in student loans, a mortgage we are upside down on, 2 car paymnts, etc etc.

So, what is your question?

You are not going to pay 2400/month. It depends if you are backed up on the mortgage or if you are current.

For example, I make more about 6k/month, and was about 20k backed up in my mortgage because I was waiting for a modification. So, I filed a 13, and my 30k in cc was wiped out, and my second mortage, and I pay about 400/month to cover the secured debt, over 5 years.

See another lawyer.

Bottom line is, if you want to keep the home, then go with a 13. If not, go with a 7. If you don't qualify for the 7, I would guess you would pay about 250 for 3 year or worst case 500 over 5 years.

BK is supposed to give you a fresh start.

Kind of tired, so sorry for the rambling.

Good luck and have peace my friend. You are looking into this way too much.

[Flamingo]

the unsecured stuff gets very little in a 13, assuming you don't qualify for a 7 (in a 7, you pay nothing).

Incorrect as to a Chapter 13...you can pay anywhere from 1% to 100% of unsecured debt depending upon your income, assets, debts, etc. If you do not qualify to file a Chapter 7, you will probably end up with a 13 and will be responsible for paying back all or a percentage of your unsecured debt. See at least 2 to 3 attorneys for consultations (most BK attorneys give free consultations) and educate yourself about a Chapter 13 - there are numerous "stickys" and other information in this forum and elsewhere on the internet to give you correct advice. Best of luck to you.

[mrval]

We are planning on seeing at least a few attorneys.

Our situation is a little strange. We are current on all of our bills. CC, mortgage, cars, etc...all current. The only thing that will cause our bankruptcy is our signatures on a personal guarantee on a commercial lease.

We have no assets, our house is upside down, and we carry 110K in student loans. From what I gathered from the first attorney we would be considered a "no asset" case if we are able to file chapter 7.

I guess im just afraid a Chapter 13 would be our only option and that the payment plan would be a financially overbearing.

[espo1357]

Incorrect as to a Chapter 13...you can pay anywhere from 1% to 100% of unsecured debt depending upon your income, assets, debts, etc. If you do not qualify to file a Chapter 7, you will probably end up with a 13 and will be responsible for paying back all or a percentage of your unsecured debt. See at least 2 to 3 attorneys for consultations (most BK attorneys give free consultations) and educate yourself about a Chapter 13 - there are numerous "stickys" and other information in this forum and elsewhere on the internet to give you correct advice. Best of luck to you.

Thanks for the correction. I guess I was "lucky" to be behind on the mortgage, so all of my 13 went to that, and not to the cc debt.

Sorry OP.

2400/month sounds high, doesn't it Flamingo?

[SMinGA]

Perhaps a good first step is to consider where you want to end up as a result of the bankruptcy. Are you hoping to keep the house? The cars? Write out your actual monthly budget - not counting credit card payments - for what will remain. Housing, utilities, vehicle payments, insurance, car expenses, medical, clothing, groceries, other necessary spending... Include student loan payments. Those do count as an expense when filing ch. 7.

YOu said you're upside down on the house. Is it all a 1st mortgage, or is there a 2nd? If you have a 2nd and the house is worth less than you owe on the 1st (making the 2nd all unsecured) then a 13 might help with that.

[mrval]

My endgame scenario has us keeping everything and getting us out of that personal guarantee. I know that may not be realistic.

I am trying to learn as much as I can about 7 and 13. This is all very new to me, without going into details about the situation with the lease, I was asked to let my business partner (brother) run the business after we had a disagreement. I honored that request, however the subsequent failure of the business was hidden from me...until I received a certified letter from the landlord demanding surrender of the premises or pay back rent.

Like I said before, we are financially stable outside of this commercial lease. Does that count for anything? Its seems like it doesn't so far.

Perhaps a good first step is to consider where you want to end up as a result of the bankruptcy. Are you hoping to keep the house? The cars? Write out your actual monthly budget - not counting credit card payments - for what will remain. Housing, utilities, vehicle payments, insurance, car expenses, medical, clothing, groceries, other necessary spending... Include student loan payments. Those do count as an expense when filing ch. 7.

YOu said you're upside down on the house. Is it all a 1st mortgage, or is there a 2nd? If you have a 2nd and the house is worth less than you owe on the 1st (making the 2nd all unsecured) then a 13 might help with that.

[OhioFiler]

What percentage of your total debt is related to this business lease debt?

[momofthree]

So does her paycheck show the deduction for the summer? If so, you should be able to list that as a deduction so that it doesn't count towards your net income. Also, the means test allows for auto loan payments. Have you actually filled out a means test form?

Check this one out, just enter your zip code (at the very top of the page and hit "change zip") and family size and it fills all the IRS standards out for you automatically. Then you just add in your mortgage and debt info. It's super easy.

http://www.legalconsumer.com/bankruptcy/bankruptcy-means-test.php?ZIP=61349&CITY=Ohio&ST=IL&FEDCT=ILC&FIPS=17011&LOC=2411&LOCNAME=Bureau&SUB=3434&SUBNAME=Ottawa-Streator&REG=3270&REGNAME=Northwest+Illinois&CBSA=36860&METRO=Ottawa-Streator

[olivies]

110K in student loans for a teacher's salary? OUCH.

Have you sought legal counsel on the lease situation? Maybe settling that is the easiest and best way out if you're really not struggling otherwise, unless the lease is tens of thousands a dollar a month.

[mrval]

110K in student loans for a teacher's salary? OUCH.

We followed our dreams of becoming symphony musicians, which we are sort of. You know when you are young, paying for student loans seems so far off. I have a BA, masters, and doctorate in music, my wife has a BA and masters..and from a private school.

Im a slightly less freaked out now. I went through the work sheet entering all of the living allowances and it shows us at -$1000 in surplus income. Ill bring that into my next lawyer consult. Have two more consults lined up.

The amount owed to the landlord through the end of the lease is approximately $400K. That assumes they are unable to lease it out in the mean time, which at the rate we were paying is highly likely in this economy.

So to answer the question, about 50% of out debt is business. The rest is in our home, cars, and student loans.

[espo1357]

We followed our dreams of becoming symphony musicians, which we are sort of. You know when you are young, paying for student loans seems so far off. I have a BA, masters, and doctorate in music, my wife has a BA and masters..and from a private school.

Im a slightly less freaked out now. I went through the work sheet entering all of the living allowances and it shows us at -$1000 in surplus income. Ill bring that into my next lawyer consult. Have two more consults lined up.

The amount owed to the landlord through the end of the lease is approximately $400K. That assumes they are unable to lease it out in the mean time, which at the rate we were paying is highly likely in this economy.

So to answer the question, about 50% of out debt is business. The rest is in our home, cars, and student loans.

good for you for going for your dream.

as for the student loans, just lock in a low interest rate and pay the minimum for those (no need to pay down a student loan with a low interest rate, when you can invest in better areas with that money).

its people that never went to college that groan over that student loan debt. Your student loan debt is not that bad. I have about half of that, and went to school for six years and it was well worth it, as I make over six figures and without my degree, I would not have done that.

also, education never leaves you, and it is a good invested if you are a serious student and build a strong network during school.

[OhioFiler]

The means test is moot if 50% of your debt is business related. Chapter 7 sounds like a plan for you.