Are we headed for a Chapter 13 instead of 7?

[mslaw]

We handed in all of our documents yesterday and the attorney hasn't gotten back with us. The NOLO means test says we are over median income and when I put in our allowed expenses it tells me we failed. How is this? We never have any money and are always overdrawn or nearly overdrawn.

My guess is it is coming down to my husband's bonuses (these are every 6 months) putting us over but these are never guaranteed and we never know how much they are going to be so we can't rely on them for income and when we do get them, we play catch up on bills. Also, I pay a ton in student loan expenses and you aren't even allowed to put those in as expenses even though they are not dischargable? What the crap!

So we are probably headed for a Ch13 huh?

[memama]

mslaw,
We turned in all of our paperwork and we didn't hear a word from our attorney. I actually called them two weeks in and they were so backed up they hadn't reviewed it yet. So, I think it's best to give them a call asking if they've gone over it before you start to worry

[kornellred]

I imagine that during your initial consultation with the attorney, it was obvious that you were in a "borderline" situation as far as qualifying for Chapter 7 is concerned. Otherwise, your attorney would have outlined where you stand in relatively certain terms. Being over the median income for your state and family size automatically presupposes Chapter 13. The attorney has to make a case for a Chapter 7 filing.
Your Ace in the Hole is your student loan debt, which drastically reduces your disposable income. If you cannot fund a Chapter 13 without severe hardship, you will get your Chapter 7.

[mslaw]

Thank you both! I know in general our state is backed up in regards to BK. It's so back logged. I will try to breath and not stress too much. Our atty did return the call and said we should know something soon. Thanks again!

[keepsmiling]

Your Ace in the Hole is your student loan debt, which drastically reduces your disposable income. If you cannot fund a Chapter 13 without severe hardship, you will get your Chapter 7.

My understanding has been that student loans usually go into deferment during a bk. That seems to be the usual consensus, unless it's a state by state thing. Very sucky rules thanks to your pals at BAPCPA. The interest accrual just adds insult to injury.

I really hope I am wrong....

[memama]

I know that my student loan account was locked (and still is) as soon as we filed and my student loans aren't even finished yet! I never even thought about interest accrual during bk filing

Honestly, I don't know how people DO afford a chapter 13, especially if most people have loans similar to mine. My loans are going to be about $70k for a Bachelor's degree when it's all said and done. With monthly payments of $805, you have to make really decent money to pay that. If you're already bankrupt, how do you even make a payment that large???? It's so discouraging FWIW, $805 is equal to our rent AND utilities! Yikes!

mslaw, I'm glad you called your attorney. The waiting game is really a challenge, but that's bankruptcy-a game of hurry up and wait!

[ValleYum]

mslaw?

How old are your vehicles? Do you have a payment on them? If you are in a chapter 13 - can your vehicles survive 5 years? Sometimes having a vehicle payment is the difference in filing a Chapter 7 versus a Chapter 13. Isn't silly that when your filing bankruptcy that you need MORE expenses to quickly discharge your debt?

Do you have term life insurance? Have you lowered your deductibles on car insurance? (You won't have a CC to fall back on in order to pay a high deductible with after you file) What did you list as your rent/house payment?

Hang in there... your attorney will call you and you will do the best thing for your family.

[Tater]

I think the time before you actually file is the most stressful. I know it was for me!! We are over median income and qualified for a Chapter 7 but prepared ourselves for a Chapter 13. Your attorney will discuss your options with you. I read a lot on Chapter 13 when I didn't know which chapter we would actually qualify for. ValleYum has posed some good questions in the post above. Try not to stress too much! I know it's easier said than done but your attorney will get back to you.

[Tater]

My understanding has been that student loans usually go into deferment during a bk. That seems to be the usual consensus, unless it's a state by state thing. Very sucky rules thanks to your pals at BAPCPA. The interest accrual just adds insult to injury.

I really hope I am wrong....

I've read a lot about this on the forum so I asked my attorney about it during our petition appointment. She just told me to keep paying on mine every month. I wonder if it does vary by state. I haven't tried my online access since we filed but I pay through online banking. I made a payment before we filed but I haven't made a payment in June yet.

[mslaw]

Tater, do you mind sharing how over the median you were? You don't have to be too specific. I know that's very personal. My dh just got his bonus and it's early. So not good timing.

[momofthree]

With monthly payments of $805, you have to make really decent money to pay that. If you're already bankrupt, how do you even make a payment that large???? It's so discouraging FWIW, $805 is equal to our rent AND utilities! Yikes!

If you file ch.13, student loans go into deferral, so you won't be making both a bk payment and a SL payment. You will only be making the bk payment. Therefore, when doing the means test or schedules I/J, these payments do not count. Unfortunately, with payments that high, you'd have to be really in the negative to be able to file a ch.7.

[keepsmiling]

If you file ch.13, student loans go into deferral, so you won't be making both a bk payment and a SL payment. You will only be making the bk payment. Therefore, when doing the means test or schedules I/J, these payments do not count. Unfortunately, with payments that high, you'd have to be really in the negative to be able to file a ch.7.

2 new cars would do it
Crazy, huh?

[mslaw]

2 new cars would do it
Crazy, huh?

Very crazy.

[Tater]

Tater, do you mind sharing how over the median you were? You don't have to be too specific. I know that's very personal. My dh just got his bonus and it's early. So not good timing.

I think we were about 10% over median income or $5,000 in our case. The paralegal showed us the means test she ran for us and we were in the negative by four hundred every month. Our state uses federal or IRS deductions on the means test but I think it was the hubby's taxes and insurance that is taken out of his check that saved our butts along with the car payments. I was very relieved when we got the call that we qualified for a Chapter 7. We were preparing ourselves for a Chapter 13 though and realized it was not the end of the world. There are several successful stories of people completing their Chapter 13's. I can't tell you how many times I ran the NOLO means test online myself. I about drove myself over the edge.

Hang in there! This is a crazy and scary time but it does get better. We just filed last week and it's been a big relief. People on this forum are very supportive and knowledgeable. Let us know how things progress for you! Timing is an important factor when planning bk.

[mslaw]

mslaw?

How old are your vehicles? Do you have a payment on them? If you are in a chapter 13 - can your vehicles survive 5 years? Sometimes having a vehicle payment is the difference in filing a Chapter 7 versus a Chapter 13. Isn't silly that when your filing bankruptcy that you need MORE expenses to quickly discharge your debt?

Do you have term life insurance? Have you lowered your deductibles on car insurance? (You won't have a CC to fall back on in order to pay a high deductible with after you file) What did you list as your rent/house payment?

Hang in there... your attorney will call you and you will do the best thing for your family.

We have a 5 year old mini van. We will have it paid off by January. We have a 8 year old Taurus and it's banged up (wrecked last year) and worth very little. We owe nothing on it. Then my dh drives a company truck so we don't own that. I know we will probably need another vehicle iin the next 5 years. my oldest daughter is 13 so she will also be driving within those 5 years. I'm just not sure I could convince my husband to buy another right before bankruptcy. He has a mental block to it. Also, our credit is not good so I'm not sure we could even get a loan?

We have term life ins. We could lower our deductibles. I listed our current house payment but we are surrendering the house and our new rent payment will probably be more but it's rent so we couldn't include that anyways. Thanks!