above median income level for a ch. 7

[joecitizen]

went for an initial consultation with a bk attorney and was told we were above the median income level to qualify for a ch.7 our only choice is a ch.13. was told to qualify for a ch.7 we either needed more debt or a loss of income.

we have 2 cars that are paid for, with each car having over 110,000 miles. a suggestion was made to purchase new cars before filing. this would add the car allowance which would in turn increase our debt level. i know we need newer cars but i am trying to get OUT of my situation, not dig a deeper hole. is there any other way to get the car allowance? maybe take a small loan out on each car, say $1,000 on each car? would this allow us to claim the full car allowance amount or just the amount we would be paying on the loan? ideas on how to get a loan with trashed credit?

[Dee]

Did the attorney actually run the means test with all of your deductions, or did he just look at your income and base his determination on that? Just because you are over the median does not disqualify you from a Ch 7, it just means that you have to go through the next step of the means test. If all he did was look at your income, you need to talk to another attorney.

[tyson24]

I concur with Dee. I had a consult with an attorney just like this. I found out later that this attorney was also a trustee, which told me all I needed to know. He did keep me from filing BK though and that was a few years ago when I had way more income.

There are ways to file and be above median but pass the means test. Find a good lawyer. Call the court clerk and ask them for a list of good attorneys.

[artgood]

Heard the same thing from a bankruptcy mill attorney. I'm trying to get out of debt, not incur more debt by buying a new car.

[joecitizen]

Did the attorney actually run the means test with all of your deductions, or did he just look at your income and base his determination on that? Just because you are over the median does not disqualify you from a Ch 7, it just means that you have to go through the next step of the means test. If all he did was look at your income, you need to talk to another attorney.

I was asked about all of my expenses and I believe what the attorney did was a "rough draft" means test if you will. I have 3 repossessions and was only asked what the deficiency balance was on each item, is this correct?

[joecitizen]

Everybody's situation is unique, and to add more detail to my situation, I have a regular full time job as well as a sole-proprietor trucking business on the side. Just one truck and one trailer, no employees. I am not able to run the truck very much due to my "real" job's schedule. So the money I am bringing in is basically covering fuel and maintenance.

The attorney told me I could not use the expense of the trucks insurance as part of the means test. Is this correct, and if so, how do I handle the business?

[ccsjoe]

Never give up or settle on the first attorney. Much like a doctor prescribing a life-threatening surgery, get a third, fourth and/or fifth opinion.

[debee]

You can get a better look at the 'means test' if you google "chapter 7 means test". Nolo has one at their website as well I think. I'm also a sole prop and my business expenses are greater than my business income, but I can only enter "0" when I do the online version of the test. So you have to declare positive business income, but you cannot declare loss. That's my understanding at this point...

Also, depending on your district, you may not be able to claim the auto ownership deduction. In CA district 9, you can't. So that may be why your lawyer advised you to buy a car. Some districts allow it.

It's being argued in the Supreme Court today and a ruling is expected after the new year. Maybe the interpretation will change at that time and the trustees will have to grant everyone the ownership deduction. Not sure how much of a hurry you are in...

(ps. I'm not an expert but there are quite a few of them around here)

[joecitizen]

debee...

I am in Southern California, which I believe is District 9.

Not sure how much of a hurry you are in...

I am not in a hurry, I just don't know what all of my creditors are doing. I don't want to get a judgment against me and have my wages garnished or my bank accounts getting raided. I am currently getting a paper check, cashing it and paying all my utilities with money orders. I only keep about a hundred dollars in my checking account. I also have deficiency balances that I am concerned will be 1099'd and cause a tax liability.

(ps. I'm not an expert but there are quite a few of them around here)

That is ok, I appreciate your time and input.

=======

How do I go about finding out if I have been sued, being sued, gonna be sued and/or already have judgments/liens against me that I am not aware of?

How do I account for repossessed items? Do I use the original loan balance and monthly payment or the deficiency balance(s) for the purpose of the means test? How would I factor the deficiency balance, take the balance and divide by 12 to get a monthly amount?

[debee]

I don't know the answers to your questions.

When I starting plugging numbers into the means test, I went round and round looking for ways to increase our expenses and reduce our income. I didn't want (& don't want) to get moved into a chapter 13. The only debt I plugged into the means test when I did it (and I did it many times before it started working out right) was for the secured debt we plan to keep: our house and the new cars we will have to finance (but need anyway).

Would you rather be making a monthly payment in a 13 for 5 years for stuff that got repo'd, or be making a monthly payment in a 7 for a reliable car that you get to keep?

Won't judgments and garnishments and all that (except a tax bill) be discharged by a chapter 7 bankruptcy? And aren't 1099's only issued for debt that is "forgiven"? I don't think you're forgiven if they come after your wages, or get judgments against you. Not sure though ...

[joecitizen]

I don't know the answers to your questions.

sorry, didn't mean for my questions to sound like i was expecting you to have an answer for them, just throwing out the questions. (questions after the ===).

[debee]

No need to be sorry. Text is weird when it comes to tone. I had none, by the way. I hope someone who knows the answers reads the thread and pitches in.

[keepinitreal]

How do I go about finding out if I have been sued, being sued, gonna be sued and/or already have judgments/liens against me that I am not aware of?

How do I account for repossessed items? Do I use the original loan balance and monthly payment or the deficiency balance(s) for the purpose of the means test? How would I factor the deficiency balance, take the balance and divide by 12 to get a monthly amount?

To find out if you're being sued, or are gonna be sued and/or already have judgments/liens against you that you are not aware of, you can sign up at Pacer and search for your name. There's an 8 cents per page fee charged, but if you owe under $10 for each quarter of the year, the fee is forgiven.

As far as including repossession-related dollar amounts owed in your means tests, I don't think you can do that since those debts will be wiped out by your bankruptcy.