Very preliminary guess if we qualify for Ch 7

[Geds75]

With all the debt my wife and I have, we have been contemplating bk. But I'm not thrilled at the idea of Ch 13 and would like your opinion of how close we are to Ch 7 (if that's even possible to do in this setting).

Together, we gross about $90-$95k per year, so we definitely need the means test. We live in Ohio and we are a family of 3.

-- Credit cards: ~$45,000
-- Medical bills: ~$30,000
-- Student loan debt - ~$200,000 (no, that's not a typo)
-- Wife's car - owe about $8,000 (which is approx market value)
-- My car - 2011 Kia Optima, paid off and worth about $10k, so it would likely be taken by the trustee - Ohio has $3,775 vehicle limit
-- Mortgage - We just bought a house, mortgage is $152k; not nearly enough equity for trustee to come after
-- Kay Jewlers - ~$5,000 only mention because I think this is secured debt
-- We have only a couple thousand worth of liquid cash (likely more after a tax refund)
-- About the only assets a trustee might be interested in are my guitars (but they're used value might not interest the trustee). There's also a few PCs in the house, but they're not exactly brand new. We only have one TV and I have a stereo system, which is Best Buy quality, not exactly high-end boutique components.

Mostly, the credit card bills are killing me. I can only afford to pay the minimum, which doesn't really cover all the interest and my balances have shot up over the credit limits. There is no way I can pay these down without an unknown rich uncle dies or I win the lotto.

The new house might raise some eyebrows, but we needed to move to a slightly larger house in an area where drugs were not being openly sold right across the street from us. We're trying for our second kid before it's medically too late for us (long story)... which reminds me, we have a lot of expensive fertility treatment bills coming. I've heard people can declare bk soon after buying a house, so I guess I shouldn't be too worried about it. The downpayment came from my wife liquidating her retirement account and we got a "gift" from her parents to pay off my car, otherwise the mortgage lender would not approve the loan (which is why my car is paid off).

I can't think of anything else to add and I'm not even sure you can make a reasonable estimate if Ch 7 is possible for us. I am so confused by the means test and what debt is counted, what debt is not counted. I also read something along the lines of if your disposable income over the next 60 months cannot cover 25% of your debt (unsecured debt only?) then you qualify.

So confused...

[Chrysalis]

Have you already checked out the means test calculator here:

https://www.legalconsumer.com/bankruptcy/means-test/

I've found it pretty simple to use, and very helpful. There are a couple of minor things I'm not sure about -- but it gives me a good idea of the overall picture.

Have you spoken with an attorney yet? Those free consultations can be very helpful in sorting some of these questions out.

[Geds75]

Have you already checked out the means test calculator here:

https://www.legalconsumer.com/bankruptcy/means-test/

I've found it pretty simple to use, and very helpful. There are a couple of minor things I'm not sure about -- but it gives me a good idea of the overall picture.

Have you spoken with an attorney yet? Those free consultations can be very helpful in sorting some of these questions out.

I looked at a means test calculator and it confused the hell out of me, but maybe I need to look at it more closely.

I did a brief phone consult with an attorney originally asking about credit card settlement, not bk. He recommended bk instead, but when he heard the details he started getting hesitant about Ch 7. But I have not had a full, face-to-face consultation. I am starting the process of adopting my step daughter and my wife does not want anything interfering with that. Meanwhile, I worry about finances. I'm trying to get a higher paying job, but I couldn't make SO much more as to magically wipe out the cc debt.

if I could land a better job, I could get access to my 401k, which might be enough to settle at 50%. Trouble is, you can't force a cc company to settle and a big chunk of that cc debt is with Discover, who are animals when it comes to suing and refusing settlements. I'm contemplating stopping paying my cc bills and fighting the battle. If I get a new job, I can try to settle. If I don't maybe I can swing Ch 7.

[bcohen]

If Discover is one of your creditors, don't bother trying to settle with anyone. They will not settle for less than 75% of the inflated balance due, and that's for a person with no real estate or attachable assets. Since you own a home (even if it currently has little or no equity) they are much more likely to sue than to agree to a meaningful settlement.

[youngman]

You need to trade in that $10,000 paid off car now. You want to have 2 car payments. This is an absolute must if you want to qualify for the Ch. 7. It will allow you to take 2 deductions from the means test at up to $517 each depending on the car payment. If you can't actually afford the car, then don't reaffirm it. But you need those 2 car payments. Personally, I think you can pass the means test if you work at it. I make that much and am single and passed it. Look at every line item, its possible.

[LadyInTheRed]

The means test is based on your income minus allowed monthly expenses, including your car and mortgage payments. No debt other than the mortgage and car loans is included. You definitely have not provided enough information for us to know if you can pass the means test. The best thing to do is to consult with an attorney who has reviewed your financial situation. Also, do try the online means test. I know it looks daunting, but a lot of the information is calculated automatically using allowed expenses. Take some time to read carefully and you will get through it.

Trading in the paid off car may be a good idea, both to pass the means test and to avoid having a non exempt asset. But, don't do that until you consult with an attorney. I wouldn't worry about the new house.

Finally, push for a Chap 7, but don't be afraid of a Chap 13. As long as you aren't trying to keep assets you can't afford, you have a decent attorney and you are engaged in the process (i.e., read and understand your bankruptcy petition, ask questions, and understand how your plan payment is calculated), you can get through a Chap 13 if that is your only option. It beats making minimum payments on increasing debt for the rest of your life.