Can We Qualify for Ch 7?

[PixieDust]

My huaband and I are planning to file ch7. We sold our house in AZ in March, moved to PA and are renting now. Long story, but all (and I do mean ALL) of the $ from the home sale is gone, as is my husband's profit sharing $ and stock option $ (which he also recieved just this year). He has been unemployed for almost 3 months and just starts his new job Tuesday. I was employed briefly, lost that job and am currently looking for another (I have been advised not to start a new job until after we file). My husband brings in around $2000/month and our expenses are a bit over that. We are a family of 3 (husband, 3 yo son and myself - 2 dogs too!).We're wondering if the income from the house, profit sharing & stocks will hurt us in the bankruptcy. Yes, it was income, but it no longer exists and will not help us in our current situation. Would we still qualify? We have a car that we are upside down in financially that we will be giving up with the bankruptcy. The car payment is $475/mo & insurance on it is $285/mo. That $760 extra a month is the biggest reason we're filing! Thanks so very very much!

Oh! And how soon after we file can I go back to work? I had an attorney tell me it'd probably be better if I wasn't working. Won't they want to know why I don't have a job?

[Whittio]

As for not working.. gosh, you aren't the ONLY stay at home mom in the world. And with the prices of daycare, heck, would you even MAKE any money after you took all your expenses out of your paycheck??

I think the people here would need to know approximate amounts of all the "income" you went through. If it was $10k, you can explain that.. if it was $100k.. that might not be easy to explain.

I think even if you DID return to work, the only thing you would want to be sure of, is that your disposable income didn't exceed $100 a month. So take your income now, write out all your current expenses, and see if there's anything left. (I don't think you can claim the car payment since you'll be getting rid of that? as well as any credit cards you might be filing on). Then, take a guess at how much you might make, but be sure to add in any expenses you'll have after you do return to work (child care, transportation, clothes, food etc).. and then see if you have over $100 disposable income.

[PixieDust]

As for not working.. gosh, you aren't the ONLY stay at home mom in the world. And with the prices of daycare, heck, would you even MAKE any money after you took all your expenses out of your paycheck??

I think the people here would need to know approximate amounts of all the "income" you went through. If it was $10k, you can explain that.. if it was $100k.. that might not be easy to explain.

As far as paycheck-daycare=income, I'd only be bringing in about $350 a month. I don't know if that's to much or not...?

And the "income" we went through was about $25k. And no real way to explain it other than we we're idiots and made bad decisions. Actually, we spent about 9k in moving across country. Don't know if they'll allow that or not...

[Whittio]

I think as long as you can "justify" it, then they shouldn't question it. I mean, if it costs you $2500 a month to survive (which is pretty low), right there is $12,500 (because there was no income coming in right??) plus the other $9k for moving expenses, that brings you to $21,500..

I think what they would be looking for is 5 months of vacationing in the Bahama's or splurging on fine furniture and just wasting the money??

I am NO expert in this.. just filed for my mom, but have been reading a lot. I think you'll find this is a great place, and it's full of wonderful/helpful people.. so at least you have that in your favor!

[Whittio]

OH, I guess you should let us know about how much debt you're filing on too. And are they credit cards? Were you using those in addition to the cash? Or were they from before?

I think the biggest thing is, is there any disposable income after your monthly expenses are paid.

[PixieDust]

Thanks for pointing out that the $ went to our monthly expenses... That's VERY true and I forgot about that. Definately not vacationing! Just 9+ days on the road in a uhaul (with a then 2 year old I might add), towing a car with 2 big dogs!

No, there is not credit card debt, we paid those off and closed them before we sold the house. Our debt is mostly on a car ($15,000), some medical bills ($500) and utilities that haven't been paid due to no money (about $1,500). And with me staying at home and just hubby working, our disposable income comes to about $10. No kidding. It's actually almost negative...

[Whittio]

So your filing BK basically just to get rid of the car?? Isn't there another way? What about letting the bank repo it? Doesn't sound like it would be much different then BK would be on your credit? But you wouldn't have to file BK and pay the fee's?? I don't know anything about a repo? But since that's the major thing you want gone, I would look into it before filing BK??

[herekitty]

Why are you keeping the car? Just out of curiousity ... there's a bunch of dealers that will advertise that you can trade in your car even if you owe more than it's worth and get something more affordable. Couldn't you just try to sell it on your own and purchase a new one?

I would think that if you could sell it or trade it in and get a different car with a lower payment that you would be able to pay off your debt that you do have since it ranges only at about $2K and that way you won't have such a negative sting on your credit report.

Just a thought.

[Whittio]

Ahh.. I never thought about trading it in. Good idea herekitty! You then would still have perfect credit!!

[herekitty]

Hey - there's a reason I'm a guru! Just kidding - I actually just heard an ad when I was reading the post - even says "good credit, bad credit - got $99 than you can get a new car" now don't know if you'd actually want to go thru them, but it's an option that's out there!

[Whittio]

Well Ms Guru, I applaud you!

I think if there is ONE deal like that, there will be more. I would at least look into it. If the car is the only thing you want to get rid of, there has got to be a better way of doing it!

[wannabedebtfree]

As for not working.. gosh, you aren't the ONLY stay at home mom in the world. And with the prices of daycare, heck, would you even MAKE any money after you took all your expenses out of your paycheck??

I think the people here would need to know approximate amounts of all the "income" you went through. If it was $10k, you can explain that.. if it was $100k.. that might not be easy to explain.

I think even if you DID return to work, the only thing you would want to be sure of, is that your disposable income didn't exceed $100 a month. So take your income now, write out all your current expenses, and see if there's anything left. (I don't think you can claim the car payment since you'll be getting rid of that? as well as any credit cards you might be filing on). Then, take a guess at how much you might make, but be sure to add in any expenses you'll have after you do return to work (child care, transportation, clothes, food etc).. and then see if you have over $100 disposable income.

I just was reading this thread and had a question about something. You stated that you don't think she can claim the car payment as an expense since she'd be getting rid of it. Just wondering if that is correct??

[herekitty]

It is - when you are considering your expenses it's what is left after you have discharged all of your debt. You don't want to include minimum credit card payments, medical bills and if you are not reaffirming your vehicle or home, you don't want to include those payments either. The point is to see what your disposable income is if you didn't have to pay anything that could be discharged.

[wannabedebtfree]

The main reason we are filing bankruptcy is because of those payments. The mortgage, second mortgage, two vehicle payments, we are just way overextended and upside down. If we don't include this items in our expenses then we will have more than $100 disposable income. So does that mean we won't qualify for Chpt 7. Our lawyer just said not to list the credit card payments. And knew we wanted to surrender everything else.

[herekitty]

You just said it yourself - you're overextended, that's a big difference from bankrupt. It you take a step back can you get things into check with out such drastic measures:? It's looking like you might qualify better for a ch 13 then.