Seeing the attorney to day (pre-filing)

[Tom_Mi]

It's almost decision time. The attorney I think I'm going to use is older (55-60) and sounds very comfortable with my situation. He says he's done this (bk with rentals involved) many many times and it should be fine.

But is he too comfortable?

He insists my apartments in foreclosure are a non-consumer and that I completely bypass means testing. I've tried and can't scare him into making me take the means test. I sure LOVE hearing that I can bypass, but man-o-man am I hosed if he's wrong and I file now with the last 6mo of income on the books!! (about 15k over means)

An earlier attorney (nice lady) told me to take the means test, but also admitted she didn't do much with investment real-estate bankruptcies.

ahhh!!!!

[tunskit]

I have no idea, but I wanted to say that if you're nervous about your income, you can download the Means Test (From 22A) from the bankruptcy court in your district and run the numbers yourself. It will either put your mind at ease, or completely freak you out. You'll have to wait for someone more knowledgeable about the non-consumer/rental debts to get an answer for that question. Sorry.

[HHM]

The attorney is correct, if the majority of your debt is non-consumer (i.e. investment properties), you are not subject to the means test. However, if you have disposable income, i.e. your income exceeds your necessary and reasonable living expenses, you can still be pushed into a chapter 13.

[Tom_Mi]

First, thanks again HHM!

I learned something new today...for non-consumer bk7 to work, total business debt must EXCEED my total personal debt.
....and your house debt (if surrendering it) COUNTS toward your personal debt. This prevents many small business owners with big houses from CH7.

For example, I can file (soon) CH7 This is because my APT balances are 500k, more than my 250k on the house.
BUT-- if I let my apts complete a short sale or foreclosure BEFORE filing, I'm HOSED.
Because if they sell at 400k, the mere 100k debt remaining is LESS than the 250k on my house..... Hello Chapter 13. (compliments of smilin' George and friends -- so much for being the champions of small business...but I digress).

If you own investment properties, know this arithmetic:
when (total debt) > (house debt + personal debt) --> ch7
when (total debt) < (house debt + personal debt) --> ch13 (or in my case it would be car + hose + garage + life insurance)

File BEFORE the houses sell.

-t

[HHM]

Keep in mind, the means test and the disposable income test are different things.

The means test is there to determine if your filing is "presumptively" abusive. The means test only applies to individuals with "primarily" consumer debt. However, if you still have "actual" income that exceeds your "actual" expenses, you still become a candidate for chapter 13.