To Move or Not To Move?

[debee]

attorney ... said I was borderline w/ Ch 7 -

That's Lawyerspeak. In English it means, "I'll file your chapter 7 petition, but you'll end up in a 13. More money for me."

this was several months ago before I got a raise.

Right. Since that meeting the median income in CA dropped and you got a raise. That puts you even further on the wrong side of the border.

- she was referred to me from an attorney in my county who many colleagues respect and admire.

This isn't going to be any comfort to you when you're 2 years into a chapter 13 and shopping Goodwill for your next bra.

But if you do decide to go ahead with this attorney, what you really need to know is how much experience she has defending UST 707(b) Motions to Dismiss and how much she's going to charge you when your turn comes.

Also, I wouldn't move out of your house soon after filing. You need to be in it when you're defending the UST's Motion to Dismiss. Otherwise they'll have an easy $1200 in DMI right there. (mortgage payment less standard expense less maintenance).

If I were you, I would speak to a few more attorneys. If they all say "YES you qualify for chapter 7" then you're good to go. Otherwise, you may need to explore alternative ways to get the job done.

Wishing you the best

[helpmeout]

In order to be able to claim the mortgage, you actually have to be paying it. With a household of 1, I am not seeing how you pass the means test, and if you are relying on the mortgage payment to pass the means test, you may want to consult with another attorney and get a second opinion. You are a Chapter 13 waiting to happen.

[Isobel]

Thank you.

I'm so disturbed... this attorney, well I wanted to like her, but I've found her to be curt, rather rude and unhelpful. Withholding would be a great description. She answers (via email) my very critical questions with one word answers, if AT ALL!!!! Often ignores them, though. And they're not stupid questions - they're questions like Will moving July 1st jeopardize my Ch 7?

Of course, I haven't sent her a deposit and I understand she probably gets barraged with questions from potential clients that will never really turn into clients. But enough is enough. I deserve to be treated better than how she's treating me. Barely gives me the time of day and (contrary to what my posts might indicate) I'm not a person who needs a lot of hand-holding. Glad I didn't send her the deposit check. Funny, she's been doing business for 20 years as a bk attorney and she doesn't have one single yelp review... does that mean something? I have a bad feeling about this. I already feel horribly stressed - dealing with the lawyer issue is making it 1000x worse... Am I expecting too much?

[debee]

You don't give the impression of someone who needs hand-holding. Everyone here has been where you are and many people here WISH they had found this forum before filing.

I think yelp reviews can be bogus. Also, a short answer is still an answer. Especially since right now she's working for free. Something to keep in mind while you check out attorneys. It's like dating. Don't marry the first one that comes along until you've at least talked to a couple others.

You can go to the CA State Bar here and look for a certified bankruptcy specialist in a county in/near yours. You can also look up the attorney you're talking about now.

[helpmeout]

To be honest, moving or not, you probably aren't going to be able to do a Chapter 7. For one thing, the trips back to see your mom aren't going to be allowed, if your mom needs full-time care, you are too far away to provide it. In order for a mortgage to be claimed on the means test, you have to pay it. That is one thing the my BK attorney was very specific about, if I didn't pay it, I couldn't list it. Turns out that I didn't need to list it as I was under the means test. But then, I have a household of 3. But I can't imagine $78K being under the means for a single person in any state. Even with a few missed days of work that were not paid.

I think you should start researching a Chapter 13.

[Isobel]

Here's an update:
* I didn't get offered the apartment so I don't have to jump off that cliff... I s'pose it wasn't meant to be
* Did the Nolo Ch 7 means test twice and passed (some of you may forget how expensive California is)
* Sent my stats and means test to 3 new attorneys
* Spoke to one attorney who said he thinks I'll be able to do Ch 7, but my future income may raise a challenge
* Meanwhile, living in my empty, empty house and scared to death of what might happen next...

Question: What will happen to my second mortgage in Ch 7? If I state I want to keep my house, even though I haven't paid 1st or 2nd since January, can I discharge the past due amounts on 1st and 2nd? And will my second then be completely wiped out (i.e. discharged as well, if that's the correct term)?

Thanks for being there, everyone...

[debee]

You're passing the means test because of the leave of absence. It's sort of a false pass, because the income is still there. You need to run through the schedules I/J and see what you end up with in DMI. If your disposable monthly income is in the $117-$195 range, your case may be recommended for conversion if that DMI is enough to pay 25% of your non-priority unsecured debt over a 5 year term. If your DMI is over $195.40, you'll be recommended for conversion to chapter 13. This is presuming everything in your means test goes unchallenged.

The Means Test is one hurdle. Schedules I/J is the next one.

You can list both mortgages and have them both discharged. The liens pass through bankruptcy unaffected. If you're upside down and there's nothing there for the second mortgage holder, it makes it unlikely they will initiate foreclosure. It would cost them money and they wouldn't get any back. This would only apply if they are two different lenders. What a lot of people do is stop paying the second and then, if they want the house, post-bk they offer them 5-10% to get the lien removed.

[helpmeout]

Here's an update:
* I didn't get offered the apartment so I don't have to jump off that cliff... I s'pose it wasn't meant to be
* Did the Nolo Ch 7 means test twice and passed (some of you may forget how expensive California is)
* Sent my stats and means test to 3 new attorneys
* Spoke to one attorney who said he thinks I'll be able to do Ch 7, but my future income may raise a challenge
* Meanwhile, living in my empty, empty house and scared to death of what might happen next...

Question: What will happen to my second mortgage in Ch 7? If I state I want to keep my house, even though I haven't paid 1st or 2nd since January, can I discharge the past due amounts on 1st and 2nd? And will my second then be completely wiped out (i.e. discharged as well, if that's the correct term)?

Thanks for being there, everyone...

In that means test that you are taking, are you including the mortgage that you aren't paying? If so, take the test without the mortgage payment, Because chances are very high that it won't be allowed.

[debee]

Some districts let debtors include mortgage payments on the Means Test even for houses they intend to surrender.

The problem isn't really avoided though because, depending on how schedules I/J are done, the UST will just file an objection based on "totality of circumstances" - meaning the debtor's ability to repay.

If you aren't paying your mortgage, or indicate you want to surrender, or aren't in some kind of work out with the lender, the UST will object to the $2200 housing expense and it will get dropped to something around $1200 depending on your county.

That's $1000 DMI right there to fund a chapter 13.

[helpmeout]

Some districts let debtors include mortgage payments on the Means Test even for houses they intend to surrender.

Mine does allow it, as long as it is being currently paid. The OP isn't paying either mortgage and hasn't for months. It is very doubtful that she will be able to include it on the means test. And she sure won't be able to claim it on Schedule J. I think the chances are very good that she is going to end up in a Chapter 13.

[debee]

Mine does allow it, as long as it is being currently paid. The OP isn't paying either mortgage and hasn't for months. It is very doubtful that she will be able to include it on the means test. And she sure won't be able to claim it on Schedule J. I think the chances are very good that she is going to end up in a Chapter 13.

Some districts allow debtors to include mortgage expenses even when they haven't been paying the mortgage. What's more, they get to include an extra expense for a portion of the arrears.

That's because in a chapter 13 they can catch up, and part of the "test" of the Means Test is whether a chapter 13 for a particular debtor is even feasible.

I agree that OP has the opportunity right now to look at her income/expenses and engage in some pre-planning if she really wants a chapter 7.

Time off work and travel expenses to see elderly parents with the health issues common to elderly parents will not be considered a "reasonable and necessary" expense.

[Isobel]

Well, unfortunately, I didn't have a choice about my paying my mortgage. I stopped paying because I *couldn't* pay: my payment increased by $400 a month, then 2 months later I lost my roommate ($750/mo) and could not for the life of me find a replacement (I guess so many homeowners are underwater and trying to rent rooms out in their homes, plus the truth is no one wants to live in my neighborhood). The second I stopped paying because I was investigating a short sale and I was told to not pay because it was a waste of money.... Now, mind you I've never not intentionally paid a bill my entire life!!!!

debee, you seem to really know you're stuff so you're probably right about visiting elderly parents not being considered "reasonable and necessary" but I find this to be quite inhumane. The purpose of the visit was to help them with legal docs like a living will, power of attorney, etc and that's when I discovered my mom's condition (by talking to her doctors) and noted how she had really started losing her mind. As you probably know, Alzheimer's is a fatal disease and it robs you of your personality and mind first, and then your body. But I suppose the bk courts would still dismiss the expenses I incurred and will incur...

[debee]

debee, you seem to really know you're stuff so you're probably right about visiting elderly parents not being considered "reasonable and necessary" but I find this to be quite inhumane. The purpose of the visit was to help them with legal docs like a living will, power of attorney, etc and that's when I discovered my mom's condition (by talking to her doctors) and noted how she had really started losing her mind. As you probably know, Alzheimer's is a fatal disease and it robs you of your personality and mind first, and then your body. But I suppose the bk courts would still dismiss the expenses I incurred and will incur...

I know a little and am learning a lot. I'm sorry about your Mom's health. I wish you the best.

[Isobel]

Thanks debee! I'm so glad I found you all!

[BKAttyMI]

Not sure what "AKA Debbie" means from the first page, but I'm definitely not Debee, not that that is a bad thing.

Like I said above, there's just no way you are legitimately passing the means test with your income. If you are, you are putting in some highly inflated numbers. It's time to decide if you can afford to keep your house in a Chapter 13, or whether you'll need to give it up. Either way, I think a 13 is going to be inevitable.

I try to be as nice as possible when non-clients ask me questions over and over again, however, once you've sucked up massive amounts of my time and haven't paid me a dime, I would probably get a bit bitter. There's also the issue that you don't know how many attorneys this person is emailing this question to. Your questions should be asked in the first consultation, then after you've paid your retainer.

Parental support is complicated, unless they're living with you or you are their guardian, it's hard to claim that you support them in another state. If so, why aren't they living with you? Travel expenses would not be legitimate, once again, you have to take the emotional aspect out of it.