13 together....or one spouse does 7 then the other does 13?

[alorth]

Hello. My 1st posting here though I have been reading and lurking since it became obvious that BK was in my family's immediate future.

We cannot claim 7 as a family since we make twice the median (I should say my spouse makes twice the median here in Michigan, and I am unemployed and a stay at home parent, as I have been unable to find work that payed enough to compensate for childcare, gas, etc.). Median is about 60k, and our household income is about 120k.

Main problem is unsecured debt. Debt has been split between us during 12 years of marriage. I have about 50k in cc's in my name. Spouse has about 100k on their cc's. We never came close to maxing out during the time this debt was accumulated from about '97 to 2006 - hadn't even used 1/2 our available credit - before 2 years ago and the financial crisis when banks cut the rest of our available credit away, right down to our balances, then raised our interest rates and minimums.

We had had no problem making payments - MORE than the minimums - until then, as I was gainfully employed, making decent money along with the spouse, we were childless, and we continued to roll debt over to low or zero-interest accounts whenever rates increased, until those options were no longer available to us. Then our young son was born. The financial crisis happened. I lost my CAREER about 2 years ago thanks to a health issue, and became the stay at home parent.

We sold our pontoon boat for cash to pay bills. We took 2 loans on the 401k. We went from $1000 in car payments and 2 newer cars to one 2001 Pickup with 100,000 miles on it and a 2006 crossover with a $290/mo. payment. We cut lawn service, mowing and Tru Green completely out. We took a lower option on the Cable TV menu. etc. etc. But we still ran out last month.

On top of all that, our house is upside down. Its worth about 260k but we owe about 300k. We are NOT late on car or house payments. We only have the one mortgage.

In fact, right now, I am the only one late on payments, on the 5 cc's in my name. Spouse can keep up with obligations in their name, but only at minimum payments.

The option is to do a 13 together, or try something a little far out, which is for me to try and do a 7, then have the spouse do a 13 after my case is filed.

The reason to do this? To eliminate my debt completely, and have the 13 be closer to 100% payback of the total unsecured debt in the spouse's name, which would hopefully allow the TT to give us a little more leeway in our monthly budget.

I am worried to death that if we do the 13 together, the budget will be too tight, and we will fail.

We want to keep the house and cars, and keep them out of the Plan, and they are all in both of our names.

On the surface, it looks like I would NOT qualify for a 7 since the HH income is twice the Median, BUT if the Marital Adjustment (line 17) is used in the Means Test and is able to legally exempt my spouse's debt payments, I DO qualify for a 7.

The question is if the Judge will accept that Means Test, or decide that it won't fly because of a Totality of Circumstances, or some other prejudicial ruling due to the income only.

I am just really worried, as I said before, that the 13 plan we would do together would be un-doable and un-livable considering how much we have already cut. Still, doing a 7 and a 13 adds a lot more lawyer fees.

Spouse has not stopped making payments yet, but needs to decide to do so very soon. We are basically frozen into indecision right now, not knowing which is the best route to take.

I will be interested to read the thoughts on our situation here.

[NowImDownInIt]

To me, it looks like you will need to file for a 13. I think that you'll be able to get into a pretty comfortable budget since most of your debt is unsecured. If you find a good attorney you WILL make it through the BK. I am a bit under median (when I started I was $15k under median) and I am doing pretty well. You may not qualify for a 7 either way. How much later would you have your wife file a 13 anyway? You will end up in the same situation with a monthly trustee payment so I would just file the once, together, and be done with it. You won't be at 100% payback with that unsecured load.

[scorpion35]

u still will not qualify for chapter 7 alone or as a family

[alorth]

I know we will not qualify for a 7 as a family. I understand that is not an option whatsoever.

BUT, I have taken the Means Test, and according to the Test, I DO qualify for a 7 on my own IF the Marital Adjustment is used. The only numbers in the Marital Adjustment figure are the unsecured debt payments my spouse makes, so its not like I used an imaginary figure, or guessed at a higher amount than what might be considered reasonable. There is case precedent to do this, as well. BUT it will come down to the Judge.

How much does the Judge normally rely on the Means Test? Is he obligated to recognize it, or is it only a guide?

[Pandora]

From what I understand, your husbands income will be used - even if you file separately. Just as your income will count towards his CH. 13 repayment.

Given you are above the median by so much - you need to do the means on a 13 - then do the 2nd part (schedules) and see where you come up with $X for payment (DMI). Most people dont really want to be in a 100% payback plan - if you are, then the only benefit is you will save on interest rates and penalties on credit cards, but your house will remain as is if you keep it and any vehicle loans you have, you may be able to cram down if the 910 rule applies, but there are more factors. Remember any secureds / secured priorities are paid back in full on top of whatever else you have unsecured. You also need to add up the debt to see if you are allowed to file CH. 13 - or if you must file Ch. 7. There is a cap on amounts under Ch. 13. You need to see what your exemptions are for your state.

Means test is not a "guideline" so to speak - its part 1 of a 2 part series to determine what BK you qualify for. Yes you can be over the median and still file CH. 7 however you have to have alot of -DMI to do so.

[alorth]

Means test is not a "guideline" so to speak - its part 1 of a 2 part series to determine what BK you qualify for. Yes you can be over the median and still file CH. 7 however you have to have alot of -DMI to do so.

I do have probably close to -300 DMI on the Means Test IF filled out as a Single Filer living Together, using the Marital adjustment to deduct my spouse's cc payments.

The house payment is about 2400 incl ins. and tax. The car is about 290. Car Ins. is 150/mo. Those are in BOTH of our names on the deed and title, BUT I am NOT on the mortgage or the Note on the car, so they would not have to be included in my 7, and are not assets since we are negative equity on both, though the amounts payed per month are considered exemptions on the Means Test, since the entire HH income is taken into account.

The 2001 pickup has no loan, and is free and clear, but has 100k miles and is worth maybe 5-6k or so. That is over the state vehicle exemption, but again, it is in BOTH of our names on the title, so I believe it is protected from being turned in, but I am not positive on that one.

Basically, there is a lot of confusion.

We have interviewed 3 attys so far, but have yet to decide. One has been counted out for being too young with only 1 year of exp - works at a mill.

One has a rather rude "bedside" manner at times, but has been around for awhile and is very smart. He does all the work himself and doesn't use paras. His office will field the collection calls too. He even filled out a basic schedule J and I(?) during our free initial consult to illustrate how screwed we are.

The 3rd guy I have only talked to by phone for about half an hour, not in person yet. We will meet in person in another week and a half. His schedule was tight. He has the most exp., yet may retire within 5 years, before the end of the 13, which worries me. But, he is the only one who is ABC certified as an expert BK atty....though I'm not sure how much difference that makes except that the court allows him to charge a little more. He seems to have the most knowledge off hand of the TTs, Judges, and the system around here, and didn't try to scare us. He also teaches courses and gives seminars to other attys on BK. He is also the nicest guy I've talked to, and also doesn't use paras for prep.

I'm leaning toward the 3rd guy, but maybe it would be throwing my extra $800 he charges away? Is ABC certification that important?

One thing for sure is that I know we need a good atty in our case, and I'm just as worried about picking out the right one as I am about going through the whole BK in the first place.

[Pandora]

even if one spouse files and the other does not - any property you hold together will have to be claimed by 1/2 (if I remember correctly reading through the forum). Are you estimating or using actual KBB / NADA Value on that 2001 truck? 5-6K seems pretty high for a nearly 11 year old vehicle - what does your county assess it at? If you are over the alloted exemption, then you'll have to pay in your share of the equity.

"The house payment is about 2400 incl ins. and tax. The car is about 290. Car Ins. is 150/mo. Those are in BOTH of our names on the deed and title, BUT I am NOT on the mortgage or the Note on the car, so they would not have to be included in my 7,....

I believe (and someone correct me if I'm wrong please) because your hubby signed the Mortgage, the bank may still be able to foreclose, thereby he will have no interest in the property - nor will you. Now if you're talking about a "survivorship" type of thing, then that may be different.

[alorth]

We are not late on the car or house. In fact, the spouse isn't late on anything in their name, though they can only make the minimums. The cards will never get paid off, essentially, if BK is not filed. But even in a 13, we would keep the car and the house (especially the house....it might be stupid, but there is an attachment as we have been here almost 10 years, and bought it new) out of the plan and pay as normal. We are not leaving the area, either.

The only one late is me on the 5 cards in my name...almost 2 payments down now on them.

Michigan is NOT a community property state, and is a Tenancy by Entirety State for Real Estate only, so they cannot go after the house since it is in both our names, even if I do a 7 in my name.

But now I'm beginning to think it will just really complicate matters to do that, and that a straight 13 is probably best, which will bring up other 13-specific questions.

I know that an attorney will have to advise me of what really can be done. But I appreciate the comments.