What can I expect???

[DOA]

Hi, I recntly fell ill, in June 05, and ended up with medical bills and so on that I never factored into my life. Anyway, I went to the attorney at the end of June, he didn't file until August. I was going for chapter 7, but the trustee filed for dismissal on 707B and recommended a 13. As it turns out, not all attorneys are created equal. Mine blundered in a number of spots and due to having horses that have to be cared for and a daughter in college there are "disposable income issues". My big question is this, in chapter 13 can they use my wifes daughters child support of $700 a month as "our" income and figure the budget against that as well? She is 18, a fulltime student still living at home, and I have never used any of her money to pay bills, it never see's my account. But the Judge seemes very annoyed that I thought it was hers, not ours and we were still obligated for part of her care. I am at a loss, and the decisions I made in the past are about to put an end to my life as I know it. Also, if I do a dissmissal instead of converting to 13 what happens with the creditor garnishment, how much can they take?

[StaciMM]

They look at the household or family #'s. The support may not be used to pay your debts, but the daughter living there does impact what you spend on groceries, for utilities, etc. and her support does add to the household ability to pay those things.

In most states, a creditor can garnish a maximum of 25% of your take home pay.

[JimH]

This is a real grey area at the moment. No one really knows how "median family income" is to be interpreted. Given enough time through cases like yours and appeals the courts will define every last variable in all of this.

According to the Census Bureau definition "a family is a group of two people or more (one of whom is the householder) related by birth, marriage, or adoption and residing together." This would seem to include your step daughter and her child in the "median family income".

If you crank out the numbers on the means test form, it may be to your advantage to claim the step daughter and child in your "median family income" even when factoring in the child support. You get two more family members to factor into the form plus you get to deduct education expenses, daycare, etc. Below is a calculator dug up by Credit Hater

http://www.bcande.com/servlet/Means22

edited 1/12/05 - The link above doesn't compute the auto allowance correctly so beware of its use.

[JimH]

Rereading your post I see you filed pre-10/17 so I'm not sure why they are forcing you to go ch 13. Before 10/17 the decision to recommend ch 13 was much more arbitrary. Plus, I'm not sure if converting to 13 would fall under the old rules or the new since you originally filed before 10/17. At least now there is a concrete way of deciding ch 7 or 13. Start by redoing the numbers to see if you gain any advantage under the new law.

[StaciMM]

If you filed before 10/17, and convert, you go by the old rules as it is based on your file date.

There has always been a provision that if you have sufficient income to repay your creditors in part, you end up in a ch. 13.

[DOA]

So, soes that mean if our income goes down and our expenses stay the same that we can convert back to Ch.7 under the rules that were in place when we filed? And for the record, the child support is FOR my step-daughter, not for a child she has(she has no child.....yet thank God)

[JimH]

I was a little confused about the child support issue. The child support you receive for her is definitely "to" your wife since it is "for" the support of the child, not "to" the child. Be honest with yourself here, you aren't actually giving your 18 year old $700 per month to do as she pleases so you are indirectly spending it as part of the family income. It's issues like this that cause cases to be dismissed - it may be why you are being forced to dismiss or convert.

If she is 18, how much longer is her dad on the hook? Is she graduating high school in a few months? It has to be ending soon.

Still crank out the numbers to see how it looks under the new rules. If you withdraw your original filing, I'm not sure how long you would have to wait until filing again - maybe it's imediate. Staci will know though.

[StaciMM]

One thing I'm not sure of - would be good to ask the attorney...

If you file a 7, and convert to a 13, you can't convert back to a 7. But I don't know if this only applies to voluntary conversions, or if it also applies when you are given the choice of converting to a 13 or dismissing the case.

In a 13, if your expenses or income change, then you can generally petition for an adjusted payment.

If you dismiss, there should not be a time limit on refiling-unless the trustee imposes one. If you decide to go that route, it would be good to interview several attorneys, discuss your entire situation with them, and think of it as an interview process. You want someone who is not stingy with their time, is willing to answer your questions, takes an interest in your case, knows what they are doing, etc.

[DOA]

Funny thing here. Her child support was only raised to $700 a month this year, when she started attending COLLEGE. The money is direct deposited from the Air Force into HER bank account, not ours. It pays for her school and gas I imagine. College isn't cheap. Her child support up to that point had only been $325 for the last 9 years. Her mom is also listed on the account the money goes into, so I guess that's where we are screwed.

[SinkingFast]

We have already discussed the 18 year old and income issue with one attny. We have an 18, soon to be 19, year old son living at home, working, and going to college. He is a dependent in the eyes of the IRS, and we also have to pay tax on his income since we claim him. We pay for his housing, food, health insurance, etc. But do we have to count his income in our total financials for BK?? His income pays his tuition and expenses at college. So far the answer we've gotten is No. He is no different than our 16 year old living at home and working. Their income is their income, not ours. Their income belongs to the minor dependents and does not figure into our income picture for BK purposes.

In your case tho, the money is income to your wife for the benefit of the child. That's totally different than if the child were the wage earner herself and otherwise supported by you.

[DOA]

It really ticked me off when the judge said "Well, your not obligeted to put her through school." Wonder how he would have felt if someone told his parents they couldn't put him through school. Very biased I think, wanting to limit a childs future due to my inept planning. I have to figure a way out of this or it is going to ruin my marriage as well. My mother died the week before Christmas, and when we walked out of the court house the other day my wife said "Well, your mother didn't live to see her biggest wish come true, but when the paperwork on this is finished, so are we. I want a divorce."

[JimH]

DOA,

How long do you anticipate receiving child support? Once 18 and graduated from high school the obligation ends. Are these arrears that he has to make up from the past or something?

[JimH]

If your wife is divorcing you, go bk afterwards, not before. Just a suggestion.

[JimH]

If your wife is divorcing you, go bk afterwards, not before. Just a suggestion.

Then again with the new rules crank out the numbers first to see if your ch 7 or ch 13 changes if you were divorced. Bk after divorce is typically a better way to proceed.

[DOA]

DOA,

How long do you anticipate receiving child support? Once 18 and graduated from high school the obligation ends. Are these arrears that he has to make up from the past or something?

Not in Indiana my friend, child support is mandatory until 21 as long as the "child" is still in school, unless you file for emancipation as her father has claimed he just might do.