Good candidate?

[LostOne0069]

And the recent Court Decision in Western District of Washington State regarding a couple who filed for BK as a Ch 7, well under the Median for a family of 4. They have 2 "adult" children living at home while attending college. The Trustee did not want to allow them to count the children to start with. Which threw them over the Median for a family of 2. US Trustee said the children count. Trustee came back with "the children earn money" so the petitioners' attny had to ammend their Means Test to include some income from each of the children.

Once again, a case where they were being claimed as dependents on their tax forms.

I do agree with you that there COULD be a problem... I just think that it's a very slight risk as long as he hasn't been claimed as a dependent on their taxes and that he has really been paying them rent.

[Brokeandbeat]

Forgot,
Can anyone give me a DEFINITIVE asnwer on this:

1. If I make below the state Median do I still have to take a means test? It seems like I would be AUTO chap 7.

Income for last 6 months

24,000

If I wait 2 months the average changes to:

$19,000 for six months

Perhaps I should wait 2 months and further my chance of a slam dunk

Hopefully they don't go nuts about future earnings, I have a teaching certification and will have the potential to make 43,000 a year starting next year, but its STILL below the Median in CT (54,000)

Thanks

[LostOne0069]

Thank you everyone for your discussion and help, I am so glad that my thread has created so much discussion.

1. I am going to be below the Median, so I am hoping that the disposable income question will not even come into play.

Me too... remember, TALK TO AN ATTORNEY. It's free and there's no obligation. You have nothing to lose and everything to gain. I don't care WHAT anyone on here says, myself included, we're not lawyers and even if we were, we don't know the specifics of your situation, nor do we know how the courts are ruling in your part of the country. The only way to find this out is to talk to an attorney... and preferrably more than one attorney.

2. Should it come into play, I will be in trouble, Although I have paid my parents rent money to cover the utilities (they don't make a profit) they did not report this as "income" on their taxes, so I beleive this could be a problem.

Well, yes and no. Write up that lease agreement and start paying the rent! Just because your parents weren't charging you rent beyond the utilities does not mean that they are legally bound to continue doing so.

3. I am hoping that purchasing a used auto will help cut a lot of disposable income down. I will finance it over 36 months to create a car payment of around $250 a month. Then I will be able to factor in matinenence, gas, insurance, repairs to give me less disposable income.

4. My cheif concern, is that trying to cut down on disposable income pre-chapter 7/13 may be considered fraud.

I'd worry about this too and, quite honestly, my bigger concern is the fact that you're about to file bankruptcy and your first act in preparing for it is to get more debt. Your parents MAY let you go back to not paying rent after the bk is done... the car company is going to keep expecting the payments. Not to mention the fact that you're already having financial problems... taking out new debt is very rarely a good fix.

As for the car you make payments on but is in your dads name... if it's registered to your parents then I'd bet that the court won't allow it as an expense... other than that... I have no idea and reiterate my suggestion that you seek the advice of an attorney.

[LostOne0069]

Forgot,
Can anyone give me a DEFINITIVE asnwer on this:

1. If I make below the state Median do I still have to take a means test? It seems like I would be AUTO chap 7.

Income for last 6 months

24,000

If I wait 2 months the average changes to:

$19,000 for six months

Perhaps I should wait 2 months and further my chance of a slam dunk

Hopefully they don't go nuts about future earnings, I have a teaching certification and will have the potential to make 43,000 a year starting next year, but its STILL below the Median in CT (54,000)

Thanks

No one can give you a definitive answer without looking at all your finances and no one here's going to do that. This is what an attorney will do at a free consultation. Go talk to one.... really.... now!

[SinkingFast]

Everyone does the Means Test. Regardless of income level.

If you're below your State's Median, an attny will generally use the Ch 7 version and stop after about 7 lines. Presumption of Abuse does not exist.

BUT, then the attny AND the Court will immediately look at Schedule I vs Schedule J. That's income to expenses. If you have $38K/yr in income and next to nothing in monthly expenses, you'll be put in a Ch 13 payment plan. A good attny won't even file a Ch 7 petition on your behalf. Attnys are held liable now for not filing in good faith along with the petitioner.

[SinkingFast]

No one can give you a definitive answer without looking at all your finances and no one here's going to do that. This is what an attorney will do at a free consultation. Go talk to one.... really.... now!

Sooooooo TRUE, Lost!!

Call and make some appts with attnys. Chat with a few. Generally Consults are free. You'll get much more definitive answers from someone who sees your numbers and knows your local Court than we can help you with.

[SinkingFast]

Once again, a case where they were being claimed as dependents on their tax forms.

I do agree with you that there COULD be a problem... I just think that it's a very slight risk as long as he hasn't been claimed as a dependent on their taxes and that he has really been paying them rent.

You are right. This is apples and oranges.

I'm just thinking of all the trouble we've gone thru with non traditional dependents living with us.

An Adult child living at home, paying rent to parents, is gonna be a sticky situation for an attny. Since attnys are now held liable as well, I would think any good attny is gonna want to be able to produce evidence to the Court of any financial claims they are asserting as fact. And, that may include showing proof of income from Mom and Dad's Bank Statements, and/or income tax returns from last year.

Just thoughts off the top of my head based on what we've had to go thru so far.

There are so many gaps in the New Law and so few decisions/opinions have been rendered to define many of the gray areas. I would rather be prepared for the worst going in and have the best happen is all.

[Brokeandbeat]

Thanks again:

Perhaps a chapter 13 isn't the end of the world. I am just hoping that the chapter 13 payments won't be the ENTIRE debt I owe, then the only point of filing the Chapter 13 was simply to in effect reduce my intrest rate, I am not willing to go through a bankruptcy simply to reduce an intrest rate, it just seem wrong. Perhaps they will say I only have to pay back 50%. Perhaps I can negotiate with the creditors on my own to have them drop much of the unsecured debt, then at least I won't have to go through with all of this.

I have a meeting with a lawyer on Sat morning, and Monday evening. Will let you know the advice I was given.

[Jenny]

If you really don't have much in the way of expenses, why not just pay the debt? If your parents let you live with them while only paying a bit in rent, why would you want to file bankruptcy? Maybe a consumer credit counseling service could help with setting up a budget and negotiating lower rates.

[Brokeandbeat]

Jenny,
The problem is that:

A. Don't want to be a burden on my parents for the next 5 years (I am already 27 years old!)

B. I want to get married eventually and do not want to be a burden on my wife.

I have heard TERRIBLE things about Debt consolidation companies, they are pirates and will leave you worse off then before.

C. Perhaps if my parents kicked me out, after or during the chapter 13, then I could convert it to a chapter 7?

[anonymuse]

$42,000 over 36 months in a Ch 13 plan is roughly $1167 a month with a 100% payout. I seriously doubt you have that much disposable income after completing Schedules I & J. Then you would not be paying 100% back to the creditors. Maybe you can payback about $600 per month and will have a 50% payout.

During a plan, you have to report changes in income; therefore, if you start making more down the road and you're not in a 100% plan, then you will have to pay more into your plan as long as your expenses haven't changed.

Do some credit counseling--you'll need to anyway if you file. Have several free consultations. Mull it all around and come back and share their different recommendations with us.

[Brokeandbeat]

Thanks,
One more sticky situation:

1. I owe 20,000 addtional on my DAD's credit card!! (He transfered it to his name for a lower intrest rate) So I am responsible for this monthly payment!

2. I also pay $280.00 a month car payment that is in my DAD's name!!

3. Will the trustee take this into consideration? I have FULL PROOF to back up my claim.

4. If I get married during a chapter 13 repayment, will they take my wifes earnings into account thus raising my payback?

Thanks!

[Jenny]

You say you're *already* 27 years old. That's young! If you do file now, you can't do it again for 8 years. That means you need to find a good job with health insurance in order to protect yourself. You need good financial habits. You have to be able to live within your means, save money regularly, and save for retirement.

If you feel you need to do this, do it with open eyes and a strong financial plan for the future.

[Jenny]

So your debt is $62,000 instead of $42,000? And you already have a car payment? Ouch. Hope your dad knows that he gets in line with all the other creditors which means if you file a Chapter 7, he gets nothing. Of course you can always promise to pay him later, but he won't be able to force you to.

Are you actually dating someone seriously, or is the idea of getting married hypothetical? Your future wife should know all about your credit problems and bankruptcy especially if you're in the middle of it when getting married.

Maybe this sounds flippant, but look at it from an outsider's point of view. You're 27. Living with your parents. Have $62,000 in debt. Just took a pay decrease. Planning to file bankruptcy. And you're asking questions about marriage. Get your financial house in order before you make a lifetime commitment and bond with another person. You're starting out behind the 8-ball here.

[Brokeandbeat]

Wow,
Thanks for the comments Jenny, but this doesn't really answer my question. Would a marrige mean that Chap 13 repayments would increase if my wife makes a lot of money? Why should she be punished for my mistakes? Actually I have a serious girlfriend who makes a LOT of money, but I don't want her to suffer for my mistakes. If I have to wait until after Chap 13, then so be it, she loves me enough that she will wait for me.