how much monthly deficit do you show?

[jal1129]

I am wondering how much of a deficit is normal to show? We did our paperwork yesterday, attorney says we are showing a $1300 deficit per month and we would like to reaffirm our car loan with GMAC. I specifically asked if showing that much of a deficit would be a problem and she said no she did'nt see any problems with it, but now I am questioning everything!

I did a search (on this forum) over the past year and could'nt find where anyone has actually been denied a reaffirmation based on income (although one could be here, I did'nt do a real extensive search).

Lawyer did explain we do have to show a deficit for a chapter 7, just wondering how much others are showing?

[HHM]

That is a large deficit, and frankly, I believe it could be problematic.

But let's clarify, we are talking about a deficit between your income and "living expenses" (not including minimum payments to unsecured creditors).

It raises the question of how you are actually making ends meet. Also, I can't believe any attorney would sign off on a reaffirmation agreement with that sort of deficit (nor for that matter a judge) because when they sign off on a reaffirmation agreement, they are claiming that keeping that payment would not be a "hardship" for you.

A small deficit is ok, (a couple hundred bucks) but a large one is generally not, unless you have a good explanation and can demonstrate how you are making up the short fall.

Maybe you should fill us in on your backstory a little. Are you married, and are you not including your spoused income (you do need to include it)

[jal1129]

okay, a little background. Yes I am married. My husband was in an accident a few months ago and has been unable to work. He has 0 income so its only my income. We are hoping he will be back to work within the next month, which is why we need to go ahead and get this done, because once he goes back to work our income will increase significantly.

The assistant filled out the paperwork. I believe she did the budget based on my last 2 weeks paystubs. She mentioned when averaging out over the last 6 months my income would be $200 more per month.She was finishing things up and I told her I still had other expenses she had'nt asked about and she said well I already have you at a 1300 a month deficit. Then I asked if there would be a problem with that deficit and keeping the car, she said she did'nt see any problem with it.

I tried to check the firm out. It is small (one lawyer). I checked on pacer and they file about 20 bk a month for the last 25 or so years. Also certified as consumer bk specialist. I know this may or may not mean much, but I figured at least they have some experience.

[HHM]

If that is the situation, you should be fine.

And for others reading this post, it is OK to show a large deficit. There is nothing in the BK code that says if your expenses far exceed your income, that you cannot file BK.
But, showing a huge deficit without a good explanation, (like jal1129 has), raises a minor red flag. But it is ultimately the creditors who would bring an objection, not the BK trustee or US trustee. Think of this way, if your expenses far exceed your income, that means, presumptively, that you have been using credit to make up the short fall, as such, you were making charges that you could not reasonably believed you could pay back, and hence committed BK fraud. However, because creditors do not actively monitor cases (unless there are recent charges, i.e. significant charges within the 6 months prior to your filing), nothing will usually come of the fact that you are showing a huge deficit.

[jal1129]

thanks for your input! I am going back the first of the week to pay and get this filed so I am going to double check with her about the budget. We have had parents, church etc, give us a little money here and there. I try not to put anymore into the checking account then I have to. She did'nt want to list these gifts as they are not income and we do have a nice amount of wildcard exemptions left that would cover them if they should come out.

It would'nt be the end of the world if we can't keep the car, but it has a nice 4% interest rate and I really don't need the stress of having to go out and buy a new car with a 400 (or less) credit score!!

[alittle2late]

jal1129,

Let us know how you make out with your Reaffirmation hearing, as I am in a big deficit also about $2000 and when I asked my Attorney the same question as to would it be an issue with the Judge, he said, he did not think so and just write a doc to attach to the agreement on how you would pay for the vehicles in the future and you should be fine. Will see, If the judge denies me, I'll just ride-through as I'm current with car loans and the bankruptcy dept's for both car loans told me just keep paying on time and you can keep the cars.

al2l

[jal1129]

alittle2late,

We signed the reaffirmation and had our 341 today and nobody ever questioned anything. Good luck!

[alittle2late]

Did your attorney sign the Reaffirmation agreement? If he did then you need not a hearing if it cause's an undue hardship because your in the red.

[jal1129]

I am sorry but I am not understanding your question. Yes our attorney did sign off on the reaffirmation, we did not have any special hearing for the reaffirmation, just the regular 341.

[alittle2late]

Yes our attorney did sign off on the reaffirmation

My question has been answered. Thanks

[ilovemycaitybug]

If I can remember right, I think we showed something around $700-800 deficit.