Very Curious Question(s)

[married2BK68]

My husband and I have been in a relationship for seven years. During that seven years, we've each finalized divorces which left us hanging with marital debt. His divorce was finalized a LOT faster than mine, which took several years.

When it came time to buy a home, it went into his name because my divorce was not yet final, as well as the fact that I had no income to qualify for the mortgage.

We also had a small child together, and I stayed home with her, having returned to work for the first time in five years (other than some volunteer and part-time work at our kids' school/preschool) within the last two months.

We have no community debt, and aside from income, no community assets.

In fact, I'm still on the mortgage of the marital home I shared with my X (long story there). I have a judgment against me for some CC debt. The rest of MY (previous) marital debt is in the window of being beyond the statute of limitations where the creditors could sue, and the seven years before it disappears off my credit report (which will be next year).

It was by stroke of divine intervention that we didn't file jointly. It was barely midnight within 24 hours of the filing that we decided to NOT include me. My dad passed away three days later, leaving me a 1/3 ownership of his home, which was paid off by his life insurance, in another state. So I dodged a bullet, in that it couldn't be an asset which could be liquidated in the bankruptcy, by it being my current husband's individual, and not our joint filing.

Fast forward 18 months into the BK, and I'm facing a job interview tomorrow which could DOUBLE my income, sending me into an earning bracket which is $20K more than what my current husband makes. With that increase would come a desire to pay back AT LEAST the judgment against me to get it off my credit report. Since the other credit card debt is past the creditor's ability to sue, I think I'll ride that one out and let it fall off the credit report next year (it would take a couple of years to pay back that one). Additionally, with that kind of increase in income, I'd also be looking at an increase in child support.

My question is this: I know that a Chapter 13 takes into consideration the household income. If that significantly changes, yet I was not at ALL involved in racking up the debt which is subject to the individual BK, how would my income change that equation? Is that something that the feds could take up to 100% of my current husband's earnings and I'd be in the position of solely supporting our family? That doesn't necessarily give me heartburn, per se (sheesh, my husband did it for five years until it became unbearable and he filed BK). What I'm worried about is doubling my income, and having the BK trustee demand all of our JOINT disposable income (which would easily be 200%+ more than what they're getting now).

That just doesn't seem right or fair considering community debt isn't what started this ball rolling in the first place.

[AngelinaCat]

Hi Ms married2BK68:

Welcome to the forum. For now please try to ignore all of the 'theatre of the mind' rubbish that you have going on inside your mind now.

INSTEAD, concentrate on getting a good night's sleep (yes, I know...) Have a good breakfast, and relax going into your interview. Hold your head up, and walk confidently. Shake hands with a good, firm handshake--but not a crushing one. Be confident in yourself and your abilities.

Good luck and best wishes to you! Please let us know how it goes.

[LadyInTheRed]

What is significant is your contribution to the household. Unless you have separarate expenses, the trustee will consider your net income to be contributed to the household. Your child support and payments on your separate debt will not be considered as contributions to the household. Talk to your husband's attorney about what other expenses might be considered not contributions to the household.

I know it doesn't seem fair that you would have to contribute to pay your husband's debt. The reason it works that way is that your husband benefits from your contribution to the household. He is not supposed to benefit at the expense of unsecured creditors. I'm not saying it's fair. It's just the way it is.

The Chap 13 is temporary. If you get the new job, the increased income will hopefully last longer than the Chap 13. So, focus on the positive side: You didn't file and got to keep your inheritance and you may be about to double your income!

How did the interview go?

[married2BK68]

Well, I get that I'd have a contribution to the household. What I was asking, which apparently didn't come through the static very well, is whether or not that could EXCEED his full income?

Let's say if I were to get the job (today was an initial phone screen, so this is still WEEKS away from coming to fruition if it even does), I could support us single-handedly as I'd be making 20K more than what he currently makes that was the basis of his Chapter 13 plan. For argument's sake, if he kicked in 100% of his income, yet it was still shy of a 100% payback to ALL creditors, both secured and unsecured, could the trustee still get into my paycheck?

That's what I'm trying to figure out. I get that my expenses (Child Support, Co-pays, Medical Insurance Premiums for myself and the child from a previous marriage, my debt, etc.) would reduce my net income that could go toward household expenses.

As anyone who has filed a Chapter 13 is quite well aware, it seems to make it through a Chapter 13, a windfall of some sort has to occur to get through it and not turn it into a Chapter 7 (and believe me, we're actually considering that).

On the new job - I'll have to get through a credit check. My scores are in the high 500s. Like I said, I've still got some uglies out there from my dark divorce past. And my X does no favors by paying the mortgage 45 days after its due - religiously - and has for the past six years. So while it's exciting to think about, I'm not optimistic I'll make it over that hurdle if I make it to the next stage of the interview process.

[ValleYum]

And you should be able to pay for better/closer childcare, a new vehicle(!?!), better work clothing, etc. before paying $$ to the Trustee. It works both ways.

Also, if you do decide to pay on your judgement offer to "PAY FOR DELETE" - what this means is they will delete ALL references to the judgement and remove it if you come to an agreement for a payment amount. If not, you could make a better used donation to a food pantry.

How did your interview go?

ETA: I just saw your reply and yes, I believe that if hubby is short of cash to make up the possible "100% payment" to the Trustee, they could reach into your paycheck. Ask your attorney to be sure.

[LadyInTheRed]

For argument's sake, if he kicked in 100% of his income, yet it was still shy of a 100% payback to ALL creditors, both secured and unsecured, could the trustee still get into my paycheck?.

Yes, it's possible.

As anyone who has filed a Chapter 13 is quite well aware, it seems to make it through a Chapter 13, a windfall of some sort has to occur to get through it and not turn it into a Chapter 7 (and believe me, we're actually considering that).

I disagree. Assuming it was appropriate to be in a Chap 13 in the first place, a Chap 13 debtor does not need a windfall to complete a well drafted plan, as long as they don't suffer any significant loss in disposible income or catastrophic financial events. Because you imply that your husband qualifies for a conversion to a 7, I'm assuming there's been a decrease in disposible income since filing or your husband qualified for a Chap 7 in the first place and chose to file a 13 to save assets. If thats the case, it's not the lack of a windfall that is the problem. It is the decrease in income or attempt to keep assets he can't afford that is the problem. If niether of those things is the cause, then either the plan wasn't reasonable in the first place or your not sticking to the budget. We have seen a lot of Chap 13 discharges around here, and I don't remember anybody talking about a windfall to get them through. What they talk about is careful budgeting and learning the real difference between a want and a need.

On the new job - I'll have to get through a credit check. My scores are in the high 500s. Like I said, I've still got some uglies out there from my dark divorce past. And my X does no favors by paying the mortgage 45 days after its due - religiously - and has for the past six years. So while it's exciting to think about, I'm not optimistic I'll make it over that hurdle if I make it to the next stage of the interview process.

If you get to the point where they are ready to offer you the job contingent on the credit check, you should probably tell them what they will find and explain why.

[married2BK68]

DH's company went bankrupt 6 months after he filed, so he took an income hit. He's managed to massage the numbers to get acceptance on an increased payment; however, medical bills and a hot water heater blowing put us square in the cross-hairs of defaulting, which is why I went back to work. We're still going to be scrounging a bit.

I could certainly substantiate my own expenses that could minimize what's available to the BK attorney. However, if/when he begins earning commissions (which should be in the next 1-3 months), that'll be money that likely goes to the Chapter 13.

It just seems as though we can never get ahead.

"What they talk about is careful budgeting and learning the real difference between a want and a need."

This, too. It's probably my biggest complaint about all of it. His form of budgeting is not proving successful, and at times, it bothers me to no end. He doesn't keep a check register for the bank account (a reason why when I started working, I opened my own account to which he doesn't have access, although we've about come to blows in that he'll ask for a transfer to the joint account). He ballparks some expenses, and doesn't remember to include others (menial stuff that adds up over time). It's extremely frustrating.

[LadyInTheRed]

If you think your husband now qualifies for a 7, he really should talk to his attorney about converting, before you get a job offer. If he doesn't qualify for a 7, he should probably talk to his attorney about a plan modification even if you don't get the new job.

It's frustrating when one spouse won't live within a budget. Any chance you can get him to turn control of all of the finances over to you? Sounds like it's time to have a frank discussion about how the household can live within its budget.