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Young, Married, Lots of Consumer Debt, Filing Alone

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  • Young, Married, Lots of Consumer Debt, Filing Alone

    Hello all,

    New to the forum, been doing some reading though trying to understand some things and avoid a panic attack.

    So here's the deal. I am 25, my husband is 27. My credit is more or less in tatters due to about 25k in consumer debt (credit cards, a payday loan mistake, and one LendingClub loan I took out a year and a half ago to pay off some of this debt prior to my wedding), 2k in medical debt, and 66k in student loans (I know they can't be discharged). I know I made some pretty big mistakes here. I know I did. I was young and stupid and still beating myself up. It took me getting pregnant to realize that we have got to make a change, so I think I am filing bankruptcy while 5 months pregnant. I have a few questions regarding all of this though.

    1. Will I get to keep my vehicles? My husband and I joint finance a 2008 cobalt and owe 6k on it. We are current on those payments. We desperately needed a car after he was in a car accident and totaled his last one so we hopped on one of the first decent running vehicles we could find. The loan is through USAA (whom we also bank with). Payments are $160 a month.

    My car is a 2016 Ford Fiesta I leased through Ford Motor Credit and have just over a year left on the lease. I am current on those payments as well at $347 a month. Ideally I would like to keep both cars as I am current, maintain insurance, and those are some of the first things paid every month. My original plan when I got the lease on the Ford was to save up the cash and pay the lump sum due at the end of the lease and own the car outright. Things didn't work out so well obviously. I really don't want to lose the cars though as making it to work would become damn near impossible. Texas public transportation is mostly non-existent.

    2. I am at the present current on my credit cards, however after speaking to an attorney they advised me to stop paying them once I know I am filing for Chapter 7. More than likely it will be about 60-90 days until I file officially as it will take me that time to come up with the payment for the attorney since I won't be paying the credit card or unsecured debt. Is this the right move? My first payments are due in the beginning of July and I am having some serious anxiety about not paying them.

    3. My attorney was fairly confident that our income will pass the means test. I make just at 37k yearly, my husband makes $10 an hour at a retail chain usually only netting 1k or so a month plus some side violin teaching where he will usually bring in between 200-300 a month on good months, and our roommate gives us $468 a month towards his share of rent and utilities. So total I guess my yearly income is about 54k. I was looking around online and think I need to include any income that a roommate gives us towards expenses. Let me know if I am wrong on that. I am trying to include everything. Our household size is currently 2 and in December/January will be 3. Still think I am good?

    4. I am doing this because after the minimum payments for everything we barely have enough money for gas and groceries, let alone childcare, diapers, or anything else we will need very soon...I guess I just want to know we aren't the only ones. I made mistakes and I want to fix them, but I am not sure how I can other than bankruptcy. I tried calling creditors for lower interest rates and I tried negotiating some debt. Everyone says no...I don't know, I guess I'm just hormonal and anxious and need some kind of reassurance I am doing the right thing for this kiddo.

    Whew. Sorry about the wordiness. Let me know if there is anything else I need to know before going through with this.

  • #2
    Fellow Texan!

    A lot of smart people here, and I'm not one of them. But I can answer a couple points.

    Family of two in Texas is $61,704 median income, so you're below that and don't need to fool with the means test. Congratulations!

    It will still come down to your CMI and your expenses. Even if you're below median income, if you're expenses are too LOW and you have a lot of disposable income left over each month, you could have a hiccup there. But that's pretty unusual.
    Your attorney should figure out your disposable monthly income.

    Your car payments are pretty low. Do you have housing costs?

    Also, is this pregnancy and delivery covered by insurance? Any out of pocket medical costs incurred after you file will go on your balance sheet. A week of unexpected hospital costs for you or baby would not be the fresh start you're looking for. Things happen... good to consider that if you're less than ideally insured. A filing date on the other side of your delivery would allow for medical bills to be included if incurred.

    And yes, don't pay your unsecured bills once you've decided to file. I am filing in September in north Texas myself, and my phone rings 25 times a day. It's just part of the process.

    Congradulations on your growing family. That's all that's really important anyway.


    • #3
      I agree with the above about filing AFTER the birth if possible, just to protect yourself from medical costs. You don't want to file and then get stuck with 100k in medical expenses that you can't file on for 8 years.

      There's absolutely no point in continuing to pay your credit cards once you've decided to file. Your good payment history with them will be erased by the bankruptcy. Better to keep that money and
      deal with collection calls and scary letters than to pay them for nothing. Yes, there's a chance they could sue you, but usually by the time it gets that far you'll be ready to file anyway.

      The cars shouldn't be too much of an issue. I'm not sure if car leases are subject to the same reaffirmation rules as car loans are, if so, you may end up having to convince the judge that the second car is really necessary. Not 100% sure about that, though, so don't panic, but it would be a good question to ask your attorney. In any event, it's not the end of the world...I surrendered my high-mileage car and was able to get a loan for a new-to-me car a week after filing. So even if you do have to give back the Ford you'll have some options for replacing it. Again, your attorney can walk you through that.
      Last edited by rjmwx81; 06-28-2017, 09:46 PM.
      This post does not constitute legal advice. If you use this advice instead of that of a lawyer, God help you.
      Filed CH 7: 5/11/17 341: 6/12/17 Discharge: 8/14/17


      • #4

        Thanks for the input, and yes, we have housing expenses. We rent a house for $1150 a month, electricity roughly $200 a month. Landlord pays other utilities thankfully. Not to mention the variety of other expenses, car insurance (206), medical expenses (fairly pricey at the moment with pregnancy stuff so maybe 150ish for copays plus husbands therapy), Internet (75), both of our student loan payments (80 a month because of income based payment plans), groceries (roughly 300 a month) toiletries (150ish), pet care (70ish depending on the month and how bare minimum we are going), gas (150ish), phone bill (in my moms name, but I cover my little brothers bill so 195 a month), and a modest entertainment budget so we don't go insane (Netflix, HBO Now, Spotify totaling 45ish). About $3100 in expenses total in those items plus the two cars. I guess I could add in stuff that we should be doing like vehicle maintenance, but I'm not quite sure how to add that in since we haven't been keeping up with it as well as we should and when we do it has gone on credit?

        So...1100ish leftover on a good month without credit minimums when my husband brings home at least 1k and makes at least 300 in private lessons. Neither of which are guaranteed on any given month. Excluding his three credit cards of course which are all affordable and in good standing, hence why he doesn't want to file with me.

        Without the credit card minimums we can actually make it fairly well. It's just that with the minimum payments we never had a lot left over to try and pay it down. Plus after the kid gets here in 5ish months (my doctor was not reassuring that it would arrive on time) we will have daycare, diapers, possibly formula, and all the other random baby expenses including health insurance for the little guy. My husband is currently going without insurance because we need the cash in his meager paychecks and adding him to mine would cost me 300 a month. We go most months without an oil change and I desperately need two new tires on the Ford.

        I'm honestly terrified that after these bills we will have too much leftover because there is no defined amount for "too much" even though the minimums on all the credit card I want to discharge is about 950 a month, excluding the payday loan. If I could pay all the damn minimums and save money for my kid I would...Essentially I could probably make it now if we buckled down, but after the kid gets here there is no way it's possible.

        As for waiting on giving birth, I don't know if I should wait 5 (or more like 6 in reality) to file since life post newborn will be insane and hectic. I have very good insurance and maternity care through my job that will cover an uncomplicated birth 100%. I work for the state at a fairly large university. I'm not anticipating anything obscene as far as childbirth goes. Maybe that's a little naive of me, but so far anything major that has come up has been covered or the doctor has put me on an actually affordable payment plan. I already talked to insurance and found out that they will cover my hospital stay for 48 hours on an uncomplicated birth and 96 hours for c-section or other procedure plus 80% of the normal essential newborn care. Like I said, maybe I am being naive in this instance. There's just a very large part of me that wants to get it over with and not deal with the harassing debt collector calls for 6 months. :-/ I already get a ton of calls from people offering "student loan forgiveness." I am half tempted to change my phone number if I didn't think it would be a massive pain in the ass since I've had this number since I was 16.

        Like I said, I might be naive here. So far the pregnancy is healthy and uncomplicated so I am unsure if I should plan for the worst or attempt optimism.

        Maybe this is something I should try and ask my attorney about. On one hand they said filing now while my husbands income is low is good, because he may start getting more hours once the summer ends and all of their summer workers leave. Not a ton of hours, but more could definitely be a problem since we already straddle that line. On the other the idea of things going wrong pregnancy wise is what is terrifying.

        Ok, sorry about that, word vomit again. I have been running over these numbers for days and it is starting to cause me anxiety.
        Last edited by MzBeccaSki; 06-29-2017, 09:32 AM.


        • #5
          I would bet a good look at your numbers by your attorney won't leave you with $1100 a month disposable income!

          Have you looked at the IRS allowable amounts for expenses for a family of two?

          Here's a link:

          "Food" for two people is $612 in those tables. You listed $300. So that's $312 off your disposable income.

          Operating costs for two cars in Texas is at least $500 allowed. You have gas listed for $150. Car insurance $206. So this is where your other maintenance and tires get figured into your budget. That's another $144 off your disposable income.

          Your attorney will very likely adjust your numbers upwards to meet the IRS allowable amounts.

          So we are at $456...Add your husband to your health insurance... another $300 and you're at $756 more in expenses perhaps. Or maybe that $300 would come off your income, but the net is the same so you get the picture.

          Look at those tables and see what you're missing. You can add up what's allowable for a family of two in all the IRS categories, and then add to that number your actual housing cost, utilities cost, car payments. Other extra expenses are considered as well. You can come up with a number this way that will mirror the number your attorney's likely to use.

          But, if you really have $1100 in disposable income and are only trying to discharge ~ $25k in debts... are you certain bankruptcy is the best option? Just asking.
          Last edited by ChaptainHook; 06-29-2017, 03:10 PM.


          • #6
            ^ yeah, that.

            Definitely look at the standard allowances that are going to be used for your family size. Also maybe ask your attorney if you can use the numbers for a family of three, since you have one on the way. (I mention this because I saw a case somewhere where they did, in fact, allow this.)

            One more thing I would add is in reference to your comment about vehicle maintenance. It isn't about whether you've been keeping up on it or not, and certainly not about whether you paid cash or credit when you did -- it's about taking a realistic look at your current and future financial needs. Vehicles need maintenance. Period. Your attorney can help you with a number for that.


            • #7
              Oh wow, yeah we are way under spending or underestimating the allowable expenses. The total debt with the medical bills and car (which I don't think I included the first time around, sorry) is 38609 plus I have 66508 in student loans, although I know I won't be able to discharge those.

              The biggest problem is honestly the minimum payments with a child on the way. We don't save a dime at the moment. Once I re-figure with the allowable amounts let me see what I get.

              Me: 2458 (after taxes)
              Husband: 1200 (after taxes for both jobs)
              Roommate income: 468 (includes his share of rent and utilities)

              Total: 4126 (on a good month, average will probably end up lower as his hours fluctuate and June and soon to be July are awful months for him)

              Rent: 1150
              Electric: 200
              Car 1: 347
              Car 2: 160
              Internet: 75
              Phone: 200
              Medical: 150
              Food: 612 (up from my 300 a month starvation budget apparently)
              Clothing/Laundry: 120 (Based off of dry cleaning bills and statements where we used credit for this)
              Cleaning Supplies: 50
              Car Maintenance: 195 (Had to average out a couple of big expenses like tires, struts, oil changes, and other items that made this year interesting)
              Car Insurance: 206
              Gas: 200
              Toiletries: 65
              Other: Pet Care: 70 (3 cats and a hedgehog)
              Entertainment: 50 (I feel like I should include this as this is our HBO, Spotify, and Netflix that keep us entertained, I don't think it counts as extravagant as far as purchases go)

              Total: 3850

              Amount Left Over: 276

              That is probably as close as I am going to get. Honestly, it's not too far from accurate when I think about it. The grocery amount is a bit high, but we also cut out beef, pork, and anything expensive months ago when things started to get bad. Prior to the debt and our wedding we spent closer to 450-500 a month on groceries so it makes sense. When I called the lawyer today one of the paralegals told me to list at least 600 especially because I am pregnant and will be pregnant when I file. To be fair, I probably should start spending more on food as my doctor keeps griping about how I'm not eating enough and what I am eating is way too carby (Sorry, pasta and rice is cheap).

              I also don't think I can include student loan payments as part of this so I didn't. I'm meeting the attorney face to face in a couple of weeks, but he seems knowledgeable and didn't seem to worry at all about it. If worse comes to worse CH. 13 wouldn't be awful, because I'm sure the amount I would pay through that plan would still be lower than my total minimums months to month. I just have to find a way to pay for childcare and I am no stranger to budgeting. I just screwed up and started relying on credit far too often. The waiting lists for daycare in our area are ridiculously long and I need to be on one by October in order to have any hope of the kid having anywhere to go when I get back to work a few weeks after the birth. :-/

              Essentially when it comes down to it my options are 1. Shoot my credit now and try and get my crap together before our baby gets here. Or 2. Wait and shoot my credit then because I am not paying on these cards when I need to buy diapers and daycare. It's a fairly lose lose situation, but I am trying to make the most of it presently.

              Thank you. That really helped me put it into perspective.


              • #8
                Your student loans cannot be discharged -- which means they do still have to be paid -- which means yes, they will be on your Schedule J (expenses). How much are your payments each month? It sounds to me like you have nothing to worry about as far as qualifying for a Chapter 7. They have to look at those student loans when considering whether you could pay into a 13. And you'd do that how, exactly? You see what I mean?


                • #9
                  Also -- you are figuring everything according to "a good month" and that is not how this works. They will average out your income from the past 6 months. So say you file in July. They'll be using the numbers from January - June to come up with an average monthly income. Have you run those numbers yet? Because that is what matters when doing this analysis.


                  • #10
                    Originally posted by MzBeccaSki View Post
                    It took me getting pregnant to realize that we have got to make a change, so I think I am filing bankruptcy while 5 months pregnant.
                    Don't do that! Wait until after the baby is born, and any medical bills from the pregnancy and delivery have arrived. You can include the medical debt in your bankruptcy, and it will be discharged. Also, then your household size will go up, which means you can claim more "allowable expenses" for purposes of the means test, and to avoid a trustee objection for having too much "disposable income". You live in Texas, where wages cannot be garnished for consumer debt, so what exactly is the hurry? Quit paying any unsecured debts, and worry about filing later.


                    • #11
                      Thank you all for all the advice. Talked it over with my husband and we are going to file after kiddo arrives. This forum has been so helpful in helping me understand the process and being reassuring towards folks who need to take this step. Seriously. I am done with the unsecured debt. Family more important at this point. Also thank you bcohen, I didn't realize that wage garnishment was even a thing in some states. I guess I am lucky to be in Texas this time around!


                      • #12
                        $276 of disposable income is going to push you towards a 13 in a lot of districts. But it still looks like you're below the IRS minimums for a couple categories, so if you bumped them up to the allowable numbers you'd be in much better shape. Your attorney will guide you on that. And, of course, once kiddo arrives, all those IRS-allowed numbers go WAY up because you're now a 3 person household. One more reason to wait.

                        Wages cannot be garnished via employer in Texas, but bank accounts can still be attached/seized, I believe. Again, if you're JUST NOW stopping your payments I doubt anything would happen before filing (the most aggressive creditor I had, Discover, waited about 9 months before suing), but it's worth at least asking your attorney about.

                        Also, read all the sticky posts in the Collections section; they'll make your life over the next few months MUCH less stressful as creditors start hassling you for payments.
                        This post does not constitute legal advice. If you use this advice instead of that of a lawyer, God help you.
                        Filed CH 7: 5/11/17 341: 6/12/17 Discharge: 8/14/17


                        • #13
                          Yeah, I also know once kiddo come along we will be getting health insurance for them, plus childcare expenses (looking to be 400 a month or so for daycare) plus diapers, formula, and everything else. I'm pretty sure that DMI of 276 in there will be long gone by the time I file. And our roommate dropped the bombshell on us this morning that he is planning on moving in with his girlfriend sometime in late August/early September so it looks like that income will also end Not terribly happy about that because he helps out not only with the rent, but also with yard work and stuff that I just can't do right now. Happy for the guy, but the timing kind of sucks.

                          My biggest fear was getting sued since I am waiting about 6 months to file, but from everything on here it looks like I shouldn't really worry about that since I am making my first payment to my lawyer next week and can tell them when they call that I have retained a lawyer for bankruptcy proceedings. 3 person household also raises the allowed monthly income in he event my husband starts getting more hours at work or if he gets more students. He isn't seeking any out, but they occasionally pop up. I think he is going to try to limit his job to 100 hours per month so that he can qualify for their health insurance plan (and maybe get some kind of life insurance or something else for him, currently he has nothing). Long term I think waiting is my best plan of action. Without paying the credit card minimums I can actually start buying things we will need post baby like a crib, diapers, formula, etc. Things I should stock up on before I need them. Hell, I went grocery shopping yesterday and bought fresh vegetables and meat! We have kind of been scrimping for a while apparently...

                          And like I said before, my attorney was pretty confident when I went over the numbers. I think I really trust this attorney because any review I found on him was excellent, so I am hoping he can guide me well. Also adding my student loan minimums as Chrysalis suggested should help too (my husband and I are on IBR plans so we pay a total of 80 a month for both of our loans since his income has been in the toilet recently).

                          Honestly, I am really surprised about the allowable expenses. A lot of these things I have considered to be "luxuries" for so long that I always thought people would think I was being irresponsible if I spent money on them. It's really such a relief that this may be over within the next year. It's hard and I am still pretty ashamed that it had to come to this, but at the same time I can't help but being happy that there is a light at the end of the damn tunnel.

                          Other random question, my husband has credit card payments as well (he only owes 500 total, his credit is fairly spotless, I was the irresponsible one) do I include that payment on our schedule J somewhere since it's an expense? Even though it's an unsecured debt that isn't in my name? I will ask my attorney as well, but I figured I would ask you guys first since you have been extraordinarily helpful.


                          • #14
                            Becca, I hear you as far as allowable expenses & considering things luxuries. It's really a new way of thinking when you actually have ANY money left over after paying the bills.

                            We are filing on Wednesday. I am having to spend some cash we had on-hand in the safe before we file.

                            I stood in the aisle at Target last night and calculated out the price per ounce on the kids' body wash deal they had going on. Realized it was the best price per ounce I've ever found, so I stocked up. I spent like $24 cash on this and some feminine products -- that's all I bought -- and somehow it still just felt wrong. To be out buying things we need, and not paying our creditors.

                            Now ~ I'm not losing any sleep over it, so don't get me wrong. I'm just saying I can completely relate to the shift in thinking we have to make, after being a slave to those minimum payments for so (SO) long.


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