Going thru means test (Paralegal says we are over)

Hi All

First let me say like most other new posters, this forum has helped relieve my stress level tremendously. Three weeks ago, I was going to bed with my chest hurting from stress. Don't get me wrong, I'm still stressed, but at least I have a path now....And I'm not like a walking zombie trying to figure out how to feed my wife, two kids and myself.

A little about myself, I have a full time job (21 years) with good income. My wife has not drawn an income in over 6 years. I also have a real estate license and have (soon to be had) rental properties, all lower income areas. My income for the past 6 months has been $36497.00 (not counting the cents at the end of paychecks, or rental income). Of that $1600 was income from my real estate license (down from 24k for the last year). My gross every 2 weeks is $2400. I have earned some OT this last 6-8 weeks in an attempt to try and catch up, but too little too late. I have slowed the ot down. It is also not guaranteed ot. I do have a pretty large paycheck coming next week from a ton of ot, which I'm afraid will hurt my means test. Paralegal told me to bring in the last 6 months income for my meeting Friday with the lawyer before I get the next check.

I was talking to the paralegal Monday and she included my rental income for the previous 6 months into my income. Rental income from the remaining 5 houses is $3050 mo., but that is very misleading since they are all financed at %80 of the appraised value when I refinanced them. In reality I only make about $100 mo per house (when occupied) not counting expenses involved in the rentals. I am not planning on keeping any of the rentals (which have been part of the problem with my declining income) nor am I planning on keeping our residence (owe 405k). The total amount owed on the rentals is around 340k. We also have about 72k on cc and just under 5k on a signature loan from the credit union. One rental has been empty for at least 7 months, now vandalized past the point of being able to afford repairs.

Cars - we have 3 - a 2004 mini van we will need to keep for my wife and kids (note about $340 mo) a paid for 1998 Stratus (a/c broke, but it gets good gas mileage and I can suffer the southern heat, part of my penitence I guess) and a 2006 Dodge truck (a treat to myself 2 years ago) that I can't afford to put gas in now and will be giving that back to the cu, note is about $520 mo.

I also opened a coffee shop under an LLC in Feb. We've been working on this for almost a year. It is losing about 5-7k a month on average. We are cutting fat there as much as possible. My wife and I are going to start working between us about 30 hrs a week, my manager has gone part time to help and I'm trying to work a deal with my landlord to put off some lease payments. I do not want the coffee shop affected by me filing a personal bankruptcy. Paralegal wants an average of personal money we put into the coffee shop every month. Most of the cc expense (60-70 percent) has been coffee shop. but all cards are personal cards. Last cash advance was April 25. We will wait if we can to avoid the presumption of fraud. We also take no income from the coffee shop.

We will also have to increase the amount we spend on childcare every month, which right now is only $290. I can see this amount easily doubled. We were current on everything thru May. I have not paid any mortgges or cc bills for June. CU has both vehicles, 2nd mortgage on one rental, and the signature loan automaticlly deducted from my paycheck. I tried yesterday to have that stopped. I told them I would pay monthly instead of paycheck deduction and I was denied that. CU branch manager said we do not have the option of paying monthly, only via withdrawals from paycheck. She could not show me that in writing though. That is about $762 per paycheck. Mandatory pension of $156 per check, health, life and dental insurance of about $243 per check, loan repayment of $152 per check on a loan from my deferred comp account (pre-tax self funded retirement account that has roughly 32k in and a loan of 15k against, kind of like a 401k loan. Different numbers, but I'm pretty sure that that is a protected account. Also pretty sure that I can't nor want to default on the loan against this), Union dues $20 per check.

With those deductions, that leaves me about 1665 before taxes and medicare. That does not include the truck note of $259 per check. I am going to ask the lawyer Friday about a ride thru, I think the term was. Where we show the truck as an expense, but go ahead and let the bank take it after the bankruptcy, not reaffirm it. And these expenses do not include any living expenses. We are estimating those as follows:
Gas - 600
Groceries- 600
Utilites - 300
Childcare - 600 ?? (out of range?)
Haircuts for family - $125 (paralegal asked about this, would not have thought of it myself)
Cable/Satellite - 150
Lease - ~ 1800 (not counting deposit)

I have a saintly mother that is going to purchase a house in her name and we will lease it from her. We are trying to find a house for her to buy now. There are a lot of good deals out there right now....:dry:

If you actually read thru all this, I commend and thank you. I tend to get long winded. I would appreciate any comments about our situation. We both would really like to file C7 and have this ordeal over within 4-6 months. And I will not have rental income after this either, so I want to verify with the lawyer about that.

Thanks again for reading this diatribe...

Dad to 2 great beautiful kids and the most wonderful wife in the world......

Wow, glad you decided to use an attorney. As far as the rentals go, they will only count the actual positive income after subtracting mtg, taxes, reasonable maintenance, etc. Just like on taxes. It just depends on your state as to wether they will count it as 0 since you will be filing on those as well. They may not allow you to count all the income you put into a business that is losing money. Child care should be fine as well as the othe expenses. There are averages for each area, down to the county level, and you can be just a little over on a few. The paralegal should know what those averages are and adjust accordingly for you. I was a little low on my utilities so she put in a higher amount for me. Your groceries look a little low to me. In my area we are allowed about 750 for 4. Your cars should be fine. My atty recommended I go buy a car with no more than a 450 payment to help make the means test. Actually several atty's I talked to said to do this. Either way if I had the excess income I would just be paying it to a trustee for 5 years. I went and bought a Camry. You may want to see about trading in the older car and see if the numbers help you pass easier. It won't even matter that you are getting rid of the truck. We traded in our paid for V8 gas guzzler. We got a fairly decent rate as our credit wasn't totally trashed yet. Good Luck

Thanks jenopher

We actually went in the hole about $3000 over the last six months on the rentals. That's just on mortgages and does not include repairs and upkeep. We'll be having a good chat with the attorney about that. Oh, I am a diy'er, but not where this is concerned. I know that I don't know enough about this to be effective. I assume that this is going to be a more complicated one anyway.

Thanks again