borderline under median and negative DMI

[yella12]

Hi there! My husband and I just had our 2nd meeting with our lawyer and paid in full for our filing. I did the Nolo means test online and we show $5300 a month in income which puts us right under the $71k for Florida. Our DMI on that form is -$1171. Does that mean we won't get to file chapter 13? My regular bills leave me with about $50 a month disposable income. My husband was getting overtime that was paying for the small luxuries like lawn service and extra groceries but our lawyer advised against that until our filing in early July.

Here's our situation:
credit card debt $50,000
not behind on anything other than credit cards
keeping house and 1 car that is owned and just leased another car
hoping to cram down $25k 2nd mortgage
non exempt assets ~$7000


Our lawyer has mentioned that we would be looking at between $175 and $200 a month to pay for 3 years. Does having a negative DMI mean I can't file a 13? I get so many questions the more research I do!!!

Thanks!

[LuciluS]

Are you trying for a Chapter 13 in hopes of 'Cramming Down' the2nd mortgage?

Have you sat down with your Attorney and together looked at Total Gross Income and your monthly expenses? There are some expenses depends on the State and District. For example, my Attorney says we can show a monthly expense for my husband's parent loan he took out for his son in his first year of college. There are some state that do not allow it as an expense. Also, pet expenses vary.

I can't imagine being a negative 1171 a judge will require a Chapter 13.

The cramdown is probably the reason you are not filing a Chapter 7?

Hopefully in the morning some of the Gurus or Moderators will be able to assist you.

Luci

[lrprn]

Here's our situation:
credit card debt $50,000
not behind on anything other than credit cards
keeping house and 1 car that is owned and just leased another car
hoping to cram down $25k 2nd mortgage
non exempt assets ~$7000

I assume you want to file a 13 even though you could file a 7 because you want to strip your second mortgage....true?

Also what's in your $7000 of non-exempt assets? Will filing a 13 help with these too?

Does having a negative DMI mean I can't file a 13?!

You can have a negative DMI and still file a 13 under the right circumstances. Be sure your lawyer walks you through why it's possible for you.

Also take a cold, emotionless look at your situation to be sure that keeping all your secured assets is worth giving up a fresh start in 90-120 days rather than having to continue payments to your trustee for 36 months.

One last thing - be sure to discuss whether you should sign reaffirmations for your secured assets when you file. Although most lawyers - but not all - will recommend not to do it, there are certain areas of the country with lenders that will insist on a signed reaffirmation for you to keep the asset after your bk is closed, even if you make payments on time. Ask your lawyer about this too.

[yella12]

Well, we are hoping to avoid someone coming in and taking our things for liquidation and having 0 credit for 7-10 years. They told us that we would be re-establishing credit with the 13 and we will need to replace my husbands car in 3-5 years and won't have any money to buy it outright. Also, we are right on the border for income. Plus trying to cram down our 2nd mortgage.

The nonexempt assets are our household inventory and my husbands car, owned outright.

[lrprn]

Well, we are hoping to avoid someone coming in and taking our things for liquidation and having 0 credit for 7-10 years.

I don't know where you got this information about Ch 7, but it's not true.

You won't lose your household goods in a 7. Trustees do not want your used furniture, dishes, etc. They are looking for assets of at least $1000 in value that can't be protected by your state bk exemptions - your husband's paid-for car, for example.

What kind of car is it? How old is it? What is the car's current market value for its condition? It may be possible to file Ch 7 and keep the car by simply paying your trustee for the value of the car over time. This would be a lot simpler and faster than filing a 13 to save the car.

They told us that we would be re-establishing credit with the 13 and we will need to replace my husbands car in 3-5 years and won't have any money to buy it outright.

Who is they? Seems 'they' have given you some mis-information about what might be possible in your situation and what might give you the best financial outcome for your family in the long run.

Most folks that file Ch 7 re-establish their credit scores and credit-worthiness within 2-3 years making on-time payments. We have many members here who after filing and closing a Ch 7 started off with small high-interest and fee credit cards a few months after filing and by paying them off every month without fail, slowly get better and better cards and a slowly improving credit score over several years. We also have many members who obtained home mortgages within 2-3 years of filing Ch 7. This is the reality - not what you've been told.

Also, we are right on the border for income. Plus trying to cram down our 2nd mortgage.

So far, cramming down your 2nd mortgage and saving your husband's car are the only reasons that make any sense at all for filing Ch 13 in your situation.

I don't know where you got your information about Ch 7 vs Ch 13, but if it was a bk attorney, please set up more free initial consultations with 2-3 more experienced bk lawyers in your area. This is an important decision that will impact your family for a long time. You need to make it with the best information possible.

[yella12]

Thanks for your information! They would be the different lawyers I've spoken with and the new lawyer we went with didn't even really go over doing a 7. My husbands car is worth about $6500 and part of the reason we didn't research 7 more was because I owned a car worth about $16000 but sold it last month and am now leasing and got $11000 cash back. My husbands car is an 03 Altima in decent shape. I'm not sure if now we'd qualify for another loan and we can't afford another payment. We are stretched really thin with the new lease payment because hubbie is not working overtime based on our lawyers recommendation to stay under the median income. So that really leaves us with about $50 disposable income.

If no one comes in and takes your assets, what do they do in a 7? We definitely have no assets valued over $1000 other than the car and house. That would be a lot easier on the budget than a 13! Hmmmm...