Repayment amount question

[emiss]

I've been reading through this section but it's all pretty daunting. Up until today my attorney thought I was a ch 7, but I got a balloon payment (five paychecks - I'm a teacher and we don't get paid over the summer) and it looks like that check will put me $3000 over a chapter 7. I'm really upset about having to do a 13, especially since the "snapshot" they're looking at doesn't represent my real income. But, if I do have to do a 13 and I'm that close to the edge is there an "average" monthly payment that I should start to wrap my brain around?
Here's our expense breakdown:
Family of 4
Take home pay: Apr $4,400 a month
2100 mortgage
1600 child care
750 student loans
1000 other expenses (gas, electricity, food, phone, etc.)
$44,000 credit card debt (950 a month in just min. payments)

So, on average we're between $1000 and $2000 behind every month.

(Sidenote: we can't/won't pull the kids from daycare because my husband is actively looking for work and this is the only place around us that works around my schedule, doesn't charge us in the summer -when I'm off from teaching - and most importantly, that we trust. Oh, and it's the cheapest around us for two kids.)

[LadyInTheRed]

You are not disqualified from a Chapter 7 just because you are over median. You need to complete the entire means test to determine if you qualify. If you don't pass the means test, perhaps you can wait to file until a few months of no income balances out the balloon payment enough to bring you below median. Also, if you received the balloon in July, it is not part of your 6 month look back if you file before the end of the month.

Consult with 2 or 3 attorneys and have them run your numbers and help you determine the best time to file. Make appointments right away in case you need to rush to file before the end of the month. If anyone tells you you don't qualify for a Chap 7 based purely on the fact that your income is above median, find a different attorney.

If you end up in a 13, your payment is equal to your disposible monthly income (income minus allowed living expenses). While I'm sure you could calculate the average of everybody's payments, it won't mean anything to you. Each case is different.

[emiss]

The payment was in June, so it counts and I just can't wait six months from now to file. I guess the real question is, if I'm behind by over $1000 every month, do I even have a disposable income? Are there ever chapter 13s with no payback?

[LadyInTheRed]

The payment was in June, so it counts and I just can't wait six months from now to file. I guess the real question is, if I'm behind by over $1000 every month, do I even have a disposable income? Are there ever chapter 13s with no payback?

No. You need to have disposible income to fund a 13. But, your actual expenses may be different from what you are allowed on the means test. This is why you have to complete the entire means test to determine whether you qualify for a Chap 7. It is rare to not qualify for either a 13 or a 7. Your other post on the same question says the paralegal said she'd talk to the attorney. Hopefully, the attorney will have her run the entire means test. If they say you can't file a 7 just because you are over median, you may want to consult with a different attorney.

Posting the same question twice causes confusion since it creates the same discussion in two places. You should avoid doing that in the future. Your question will get answered even if posted in only one place.

[emiss]

Thanks! I realized afterward that it was more of a chapter 13 question, but I didn't know how to move the post. Thanks for the heads up.

[NoTomatoCan]

The payment was in June, so it counts and I just can't wait six months from now to file.

What is preventing you from waiting 6 months to file? Pending foreclosure or lawsuit already in progress?

[momofthree]

Really you wouldn't have to wait 6 months. The lump sum paycheck you received was 3 months pay, right? So you just have to wait 3 months so that the lookback shows your average monthly salary. As long as you're not being sued, then you should be able to wait another 3 months...

And, no, there's no such thing as a ch.13 with no payment. Even if you pay 0% to unsecured creditors (like me), you still have to pay something into the plan, whether it's a car payment, mortgage arrears, back taxes, etc, and then also pay the trustee fees and attorney fees on top of that.

You should qualify for a ch.7 without any problems though once the lump sum payment is averaged...

[SMinGA]

First thought: how will a ch. 7 help you? Mortgage + student loans + other expenses leaves only $550 a month. And I doubt $1000 a month is enough for food, gas, utilities, auto insurance, clothing, household needs for a family of 4. And that is not counting the child care... If your budget is still negative, filing now could use up your onhe fresh start yet you're financially still in trouble.

I recall in another thread you were working on a mod. Is $2100 before or after the mod? Its eating you alive.

[SMinGA]

I agree that you are still confused on the 6 mo look back.

First of all, being calculated at over median is not an automatic no to ch. 7. Just means you need an atty with some common sense and not one who is only willing to take cases that require no brainwave activity on the part of the atty.

If you want it to be easier... I'm guessing you don't get paid in July? What is the average for Feb-July? Over or under median? If under, file Aug. 1.

[emiss]

Thanks for all the input. Let me try to answer questions.

The major reason we want to file now is that my husband is actively looking for work and it looks like something may come through in the next six months (he's taking some classes and doing other proactive things). Once he has steady work, I'm guessing (hoping) that that would push us over the limit, so we'd be filing a 13 anyway.

The $2100 a month is after the loan mod (saved us $300 a month). I might be a total optimist, but I think in the near future my husband will be able to contribute to that expense. I really want to keep our house, so that's been a priority.


First thought: how will a ch. 7 help you? Mortgage + student loans + other expenses leaves only $550 a month. And I doubt $1000 a month is enough for food, gas, utilities, auto insurance, clothing, household needs for a family of 4. And that is not counting the child care... If your budget is still negative, filing now could use up your onhe fresh start yet you're financially still in trouble.

I totally hear what you're saying and I've given it a lot of thought. The main issue is that we're being hounded by creditors and collection agencies and I know that we just can't pay the almost $1000 a month that they're looking for in credit card debt. They call us dozens of times a day, call our family on a weekly basis, call our neighbors, you know the drill. I just can't take it much longer.

The student loans aren't dischargeable anyway, so those just are what they are and the daycare just kind of is what it is too (for a lot of reasons). I know we're deep in the hole, but I feel like if we file now and get something close to a fresh start we can start digging out the rest of the way slowly but surely. But, I'm open to any and all ideas. I've been thinking and researching for months, but I still feel totally out of my league in so many ways.

[SMinGA]

This is a bit out of the box thinking - but...

I think you may be better off to file after your husband goes back to work so you CAN file ch. 13. Here is why:

Its just a matter of time before you fall behind on your mortgage. Either that, or you won't be able to pay utilities, buy food, maintain home & car maintenance.

In the meantime, start figuring out a real budget. Average utilities, groceries, gas, vehicle maintenance, insurance, personal supplies, household items (paper products, cleaning supplies), home maintenance, clothing/dry cleaning & supplies, etc. Even a reasonable amount monthly for entertainment.

Chances are you can eventually file ch. 13, to resolve the arrears on your mortgage that you end up with. Filing before your husband's new pay increases your 6 mo lookback & you're still below median means you can even do a 36 mo plan.

Ch. 13's are not horrid, and can actually be useful. Requires good & realistic budget planning. $1000 a month for utilities, gas, groceries, and all other expenses/spending = doomed to fail.

[SMinGA]

ps-I'm guessing that $1000 is more like $1825-2575 and those are conservative estimates.

I have no way to compare my costs directly to yours but I figure utilities (heating/electric/water/sewer/garbage) are likely $350-500/mo. Communications (cable/internet/cell/phone) $150-250. Auto insurance $75-125. Gas/vehicle maintenance $100-300 unless you drive alot, then it could be more. Groceries, household, clothing, etc. $1000-1250 easily. Home maintenance & entertainment $75 each. Not sure if you have any car payments.

[momofthree]

If you file in Sept. (2 months from now), your lookback will be Mar-Aug. That should include a couple of months of $0 pay and will balance out the balloon paycheck you got, dropping you under the median. You'd only have to wait 2 months from now--even less if you file Sept. 1st! And if your dh finds a job next month, he wouldn't get a paycheck until Sept and therefore his pay wouldn't be included in the lookback.

You do NOT have to wait 6 months.

The calls suck, but if you tell them you're filing bk & give them an attny name & #, they'll decrease or even stop altogether.

[emiss]

Wow, that's really something to think about. It's true that even if he gets a job soon, which he may, it would be teaching, and he wouldn't get paid until September. So, if we filed in August and the lookback was through July it would show no income for the month of July (because that's part of the lump sum that I got) which would even things out.

In terms of 7 vs 13 I just don't know much about 13 but the idea of paying for five years just feels very daunting, kind of like one more thing hanging over us all the time. The idea of wiping the slate clean feels much better, but again, I don't really know much about 13 because it never occurred to me that we might be above the limit.

My attorney only does BK and his advice so far has been good (at least to my thinking it has been) so I'll be interested to hear his thoughts when we talk tomorrow. I'm just worried that we're so close and now it just feels like one of those "one step forward, five steps back" situations. But, maybe I have to expand my thinking to see the potential positives of a ch 13.

[emiss]

This might be a stupid question, but even if the lookback only looks at the past 6 months, if he gets a job that starts in September and we know about it when we file, wouldn't they take that future income into account? It just seems odd that they'd only look back if there were more income on the horizon.