putting it all out there. Here's our situation.

[mslaw]

Thanks for the detailed explanation. I know that took a lot of time.

Question though, if we are including our house in a Ch7, wouldn't the amount still be based off what our mortgage is and not off a rental amt? I thought rental amt only came into play if we did a Ch13? I was under the impression, whether we were keeping the house or not, that we can include the mortgage amt as that is where we are living right now. Thank you!

[karm43]

Wow thats pretty good! Was trying to say in a round about way better off keeping it for now, then u could be free, but have to put things like necessity not luxuries.

[keepsmiling]

^What she said.
There was a mom here a year or two ago with a large family who managed to get higher rent for her large family approved, but it was MAJOR headaches and months of hard work.
Better not to traipse down the road when a far better plan has been outlined here for you.

[ValleYum]

momofthree thanks SO much for putting that info out there for her this morning... I am headed out the door for yet another doctor's appointment and had left the monitor on this screen to jiggle my memory. Folks that take the time like you just did are why this is one of the BEST forums on the net. {{{hugs to you}}}

Another thing I thought of, if mslaw is planning on filing soon,would she need to STOP making ANY payments (hers or the person they cosigned with) on that unsecured debt she is a cosigner on so they could not possibly be considered a preference? Perhaps explain to the debtor -they are gonna know anyway since they will be listed.

[momofthree]

A few thoughts. I think you can make it into a ch.7 if you work at it. First of all, median income for a family of 7 in Kentucky is $85083, clearly you're over with both of you working. However, being under median is only the first hurdle. If you can show little-to-no dmi on your income/expense schedules (known as I and J on here), then you can still file a ch.7

First, on the income. They're going to make you count the bonuses when calculating income. You will be expected to keep that bonus and add part of it to each month to supplement your income and make it work. At $85k (using the highest figure), that would be $7083 per month. Minus out taxes, insurance, etc. I'll estimate that it's down to closer to $6000/mo. take home. Then, your income of $1400/mo - taxes, etc = $1200 take home (?)

So, we have an income estimate: $7200/mo.

Now, let's review your expenses. For a family of 7, I"m guessing that $7200 doesn't go nearly far enough, but keep in mind, you cannot count any unsecured debt payments (not even those pesky student loans that never go away). You also can't pick and choose which debts to include. It doesn't matter that that huge personal loan has a co-debtor. You can't include that payment in your list of expenses.

$1226 Mortgage payments (I'll explain below why I'm including this)
$200 home maintenance
$600 utilities
$2163 IRS standard for food, clothing, personal care items, household supplies, etc
$500 medical (may need to show proof)
$100 dental (braces, guesstimate)
$500 gasoline
$150 car insurance (this is a guess since you didn't list it)
$200 car maintenance, tags, etc.
$200 children's school expenses ($40/mo/kid)
$950 car payments (I'll explain below)
$100 term life insurance for both of you
$100 disability insurance for both of you
$150 recreation (This is only $21/person/mo, which seems quite reasonable, IMO)
=7139

Bam, your expenses are all eaten up. You're in a ch.7. If your medical expenses are even higher and you can provide documentation of the expenses, you can also include that.

Now, to explain 2 things: mortgage & cars.

First of all, the IRS has set up national standards as a guideline for expenses. As you see above, I have a few of them listed in your budget: use them! However, they can also work against you, which is why I listed your mortgage. The IRS standards for rent in Kentucky are low. Most of them tend to range between $600-900 a month for families 5+, depending on county. If you choose to rent right off the bat, you'll probably be a ch.13 and be stuck in a tight budget for the next 3-5 years, and may very well have a very difficult time finding a rental for the IRS standard amount. Rock, meet hard place. However, if you choose to retain your home, then you can use the actual payment of $1226. Here's the great thing about a ch.7 bk: It discharges your personal liability on your mortgage, so even if you choose to stay in the home during your bk, if, a few months later, you find it is simply too difficult to maintain that payment or decide to walk away at that point, you can! With zero liability!

Second point: cars. Get rid of the lease. Include it in the bk and walk away from it. Then, buy yourself 2 cars. Keep each payment below the IRS standard of $496/mo, but get as close as you can, because you need the expense. This will give you the allowable expenses you need to qualify for a ch.7. Think about it, would you rather have 2 new cars and a ch.7 bk? Or would you prefer to have 1 new car and a ch.13 payment? The choice is obvious, IMO. Since the company truck is only for work-related driving, you can argue that your dh needs his own personal vehicle for personal use. Although, the court probably doesn't even have to know about the company vehicle since you don't own it or have to pay any expenses for it.

If you haven't already, see at least 2 more attorneys and take the above expense list with you. You should be a ch.7 if you follow the above guidelines.

Also, if you find yourself running a bit short on expenses for any reason, increase your insurance coverage on your vehicles/life insurance, adjust your deductibles down, etc. to increase your insurance premiums. Buy a disability insurance policy. Insurance is considered a reasonable and necessary expense, so it won't raise red flags.

Good luck and keep us posted.

[papie]

You can't rent a house in the nearby city for less than 1200-1300 mo.

I live in Indiana and work in Kentucky, I'm pretty familiar with the rental markets in the area, and you certainly can find larger places to rent for less than $1200/month in the metro area. Granted, your children aren't going to have their own bedrooms, but from my own rental experience you can find a four bedroom home in the $800-$900 range in a decent neighborhood. It might not be ideal, but you only need five years, and then you can move on. You're largest hurdle in this area will be finding a landlord that will accept your credit. I find that the metro area is a tad more expensive than the surrounding areas.

If you would be willing to move across the river into Indiana, my landlord is awesome! lol You may be talking about a different city though.

[mslaw]

If you give your house up, I would wonder if that would be more dmi for them to take. Was looking at your state seems pretty cheap to live there. Renting for less will give themm more money. I would figure out what you spend on everything like braces def count but piano lessons probaly not, they consider that a luxury. I am sure your utlities food are way more then the avg. I bought a new car, should have bought 2. Watch if they tell you they will give you a car expense if you own, cause that not a law in stone. Sometimes they tell you what you want to hear to get your business.

You can't rent a house in the nearby city for less than 1200-1300 mo. So I'm not sure where you got the stats on renting/buying? Yes it's cheaper than say California but not cheap. Also, it says you can have entertainment expenses and even put down school expenses for your kids so I would think the piano lessons for our kids would count? It's part of education? Why do you think our food and utilities are more than average? Yes maybe more than the average 4 household family but there are 7 of us. That includes diapers, toiletries, etc. Utilities - our electric bill can be $200 alone per month and on some months we are spending $300+ for heating fuel.

We do not own a car. We have a lease that we aren't sure we are keeping. We will have to buy another van before we file if we decide we aren't keeping the van we are leasing (lease is up in Feb).

[karm43]

Noticed you have a unsecured loan with codebtor not sure what would happen with that. I would ask someone here with some knowledge.

[karm43]

If you give your house up, I would wonder if that would be more dmi for them to take. Was looking at your state seems pretty cheap to live there. Renting for less will give themm more money. I would figure out what you spend on everything like braces def count but piano lessons probaly not, they consider that a luxury. I am sure your utlities food are way more then the avg. I bought a new car, should have bought 2. Watch if they tell you they will give you a car expense if you own, cause that not a law in stone. Sometimes they tell you what you want to hear to get your business.

[keepsmiling]

Taxes $75/mo.
I just had to do a double take.
That's might get you thru 3 days here. Really I don't know how anyone can actually afford to live in my state.

Do remember that when renting, you will lose your tax deduction. Your taxes are so minimal, so it won't be a huge difference, but you may want to factor that and your interest deductions into your calculations somewhere along the line.

[mslaw]

Sorry just seen post that is really not that much for a family of 7. I would shop around maybe you could get a 7.

Thanks! I really feel the same.

[karm43]

Sorry just seen post that is really not that much for a family of 7. I would shop around maybe you could get a 7.

[mslaw]

The reason I asked about the home value and such is that one tool ch. 13's are useful for: 2nd mortgage stripping. If you owe more on the 1st than its worth, you can get the 2nd stripped/treated as unsecured and at the end of the payment plan its gone. If the house is in poor shape, that may not be good news for you. But if staying in the house with just the 1st mortgage would make life easier - you could possibly turn a $370 2nd payment into a $150-200 ch. 13 payment. With a thorough yet accurate budget & the right attorney, that is.

AS to the car situation - perhaps you should see if you can get approved for something now. If so, then taking the new loan and letting the lease go back might be a wise move as you need to think long terms regarding your transportation needs.

I understand, that makes sense. Thank you. We are pretty set on letting the house go back. It's just really not worth saving.

I am going to talk to the hubs about the car thing. it does make sense. we aren't really doing ourselves any favors to try to keep the van when it may hurt us down the road and we owe more than its worth and really something could happen to it anytime and it has no warranty.

[SMinGA2]

The reason I asked about the home value and such is that one tool ch. 13's are useful for: 2nd mortgage stripping. If you owe more on the 1st than its worth, you can get the 2nd stripped/treated as unsecured and at the end of the payment plan its gone. If the house is in poor shape, that may not be good news for you. But if staying in the house with just the 1st mortgage would make life easier - you could possibly turn a $370 2nd payment into a $150-200 ch. 13 payment. With a thorough yet accurate budget & the right attorney, that is.

AS to the car situation - perhaps you should see if you can get approved for something now. If so, then taking the new loan and letting the lease go back might be a wise move as you need to think long terms regarding your transportation needs.

[SMinGA2]

The trustee can't take a car you don't own (you don't own a lease) and its uncommon to lose assets in a 13 anyhow. The concern I would have is its a lease and either you'll need to turn it in and replace it, or find a way to finance the balance owed. And you need trustee's approval to seek/get financing.